Italian mortgages usually use the French amortisation schedule, known as ammortamento alla francese. The monthly payment stays the same through the loan, while the split between interest and capital changes: early payments are mostly interest, later ones mostly capital. The payment itself comes from one standard formula.
The formula
Monthly payment M = P x r x (1 + r)^n / ((1 + r)^n – 1). P is the loan amount, r is the monthly interest rate (annual rate / 12), and n is the total number of monthly payments. For a 25-year loan, n = 300. For a 20-year loan, n = 240.
Two details trip people up. First, Italian rates are often quoted as TAN (the nominal annual rate) and TAEG (the effective annual rate including fees). Use the TAN for the payment formula, but compare loans by TAEG, since it includes the extra costs. Second, variable-rate loans (tasso variabile) change with indexes like Euribor, so the payment you calculate today is only valid until the next rate reset.
Worked example
Borrow 200,000 euros at a 3.5% annual rate for 25 years. The monthly rate r = 0.035 / 12 = 0.0029167, and n = 300. Working through the formula gives a monthly payment of about 1,001 euros. Over 300 months you pay about 300,300 euros in total, so roughly 100,300 euros of that is interest.
In the first month, interest is 200,000 x 0.0029167 = 583 euros, so only about 418 euros of the first payment reduces the capital. By the final years the split reverses: almost the whole payment goes to capital. This is normal for French amortisation and is not a trick by the bank.
Fixed or variable rate
A fixed rate (tasso fisso) locks the payment for the whole term or for a long initial period, which makes budgeting simple but usually starts higher. A variable rate starts lower but moves with the market, so your payment can rise. A mixed or capped rate (tasso misto or cap) sits between the two. The right choice depends on how much payment risk your budget can absorb, not on guessing where rates will go.
Also budget for the costs around the loan, not just the payment: appraisal, notary, registration tax, and insurance. These do not appear in the monthly payment formula but they affect the total cost and the TAEG.
Quick checks
If a quoted payment looks far from your calculation, check the term first: stretching from 20 to 30 years cuts the monthly payment a lot but adds a large amount of total interest. Check whether the quote includes insurance or fees rolled into the loan, which raises P. And confirm the rate type and reset dates before signing.
What moves the payment most: rate or term?
The interest rate moves the payment more than most borrowers expect. On a 200,000 euro loan over 25 years, a 2.5% rate gives a payment of about 897 euros a month, while a 4.5% rate gives about 1,112 euros. A two-point rate rise costs about 215 euros a month, or 64,500 euros over the full term if the rate stayed there.
Term length matters too, but differently: stretching from 20 to 30 years cuts the monthly payment sharply while adding years of interest. Before choosing, compare total interest for each option, not just the monthly figure. A payment you can afford on a term that costs far more overall is not automatically the better deal.
Try it faster with the tool
You can follow every step above by hand, but the free Italian Mortgage Calculator does the arithmetic for you. Enter your numbers and it gives the answer right away, so you can check your hand calculation or skip straight to the result.
Quick tips
- Use TAN for the formula, TAEG to compare loans.
- Longer terms cut the payment but raise total interest a lot.
- Variable-rate payments change at each reset date.