How to Calculate a Mortgage Payment in Colombia: Annual Effective Rate, Term, and a Step-by-Step Example

Quick answer: with three data points (loan amount, term in months and annual effective rate) you get the fixed monthly payment in pesos. You convert the E.A. to a monthly rate and apply the annuity formula. Below we do it with a complete case and, if you prefer not to do the math by hand, you can try your own numbers in the mortgage simulator of Colombia Move.

A warning up front: the 12 % E.A. we use in all the examples is a starting assumption of the simulator, not the market rate. The rate that counts is the one in your written quote. And to see what sellers are asking today, check the property portal.

What the bank quotes you: annual effective rate, pesos or UVR

Law 546 of 1999 (art. 17) states that the interest rate on a housing loan is expressed only as an annual effective rate, is charged in arrears, is not capitalized and stays fixed, unless the parties agree to lower it. That is why every serious quote shows an E.A., not a nominal rate.

A peso-denominated loan is possible if the rate is fixed for the entire term, interest is not capitalized, and total or partial prepayment is allowed without penalty. The alternative is UVR, a unit certified by the Banco de la República that tracks inflation: the payment is constant in UVR, but in pesos it changes over time. In this article I calculate only the fixed payment in pesos. For an overview of lenders and loan types, check the 2026 mortgage guide.

From annual effective rate to monthly rate

This is where many people trip up: the monthly rate is not the E.A. divided by 12. The Superfinanciera publishes the correct conversion:

i = ((1 + ia)^(1/12)) − 1

With ia = 0,12 (our example), i = (1,12^(1/12)) − 1, which gives approximately 0,0095, that is, about 0.95 % per month. If you divided 12 by 12 you would get 1 % and the payment would be miscalculated. That i is the one that goes into the annuity; do not present it as the rate the bank charges each month, because the agreed rate is still the E.A.

The fixed payment and the first split of interest and principal

The single scenario in this article: a home of $300.000.000, a down payment of $90.000.000 (30 %), a loan of $210.000.000 over 240 months (20 years) and a 12 % E.A. example rate. The fixed payment is the uniform annuity on the starting balance, the number of months and the i above: C = P × i ÷ (1 − (1 + i)^−n).

For this case, the Colombia Move simulator showed on 15 November 2026 a monthly payment of $2.223.109 without insurance, with total interest of $323.546.169. If your calculator differs due to rounding, go with the simulator's figure and understand the logic, which is this:

• Monthly interest = previous balance × i. In the first month it is about $1.992.600.
• Principal payment = payment − interest. In the first month about $230.500 remains.
• Balance = previous balance − principal payment. It only goes down by the principal, never by the interest.

That is why the first payments go almost entirely to interest. At the end of year 1, the simulator shows interest of $23.762.765, principal of $2.914.544 and a balance of $207.085.456. After twelve payments, the debt has barely moved. This is normal in this system and is the reason why making early principal prepayments matters so much.

This calculation starts from the property price. If you are still comparing how much apartments are asking, the price per m² is a different calculation: we explain it in how to calculate and compare the price per square meter. Repeat the example with your numbers in the simulator; there you can also see the full amortization schedule.

Term, 70 % or 80 % financing and the 40 % cap

Three rules worth being clear about before going to the bank:

• Term: the legal minimum amortization period is 5 years. The maximum set by the Government cannot be less than 30 years (Law 2079 of 2021), and the Superfinanciera describes the range for housing loans as between 5 and 30 years.
• Financing: up to 70 % of the property value, and up to 80 % if it is social interest housing (VIS). The value is the purchase price or an appraisal from the six months before disbursement.
• First payment: since Decree 583 of 2025 (published in the Diario Oficial 53.132 of 29 May 2025), it cannot exceed 40 % of verifiable household income, both for VIS and non-VIS housing. This counts income from spouses, permanent partners or relatives within the degrees set by the decree.

Watch out for a very common confusion: the simulator labels in the example "necessary income (30 % payment)" as $7.410.363. That is a more prudent planning rule that the tool uses, not the legal cap or a minimum approval income. And meeting the 40 % does not oblige the bank to approve you either: each institution reviews other debts, credit history and stability, and may apply a lower internal limit. I would not set the budget right at the legal limit; a cushion breathes better.

Extra principal prepayment: do you lower the payment or the term?

The law allows total or partial prepayment at any time without penalty, and with a partial prepayment the borrower chooses whether to lower the payment or the term. That decision changes the result completely.

In the example, the simulator indicates that an extra payment of $300.000 each month would save about $116.903.635 in interest and shorten the loan by roughly 6 years, provided the prepayment is applied to reduce the term. If you choose to lower the payment, the saving is not that. My advice: if you can, ask in writing how the bank will apply each prepayment and make a note that you want the term reduced.

What is not included in that payment

The formula payment is only the debt service: it does not include insurance or late-payment interest. The decree requires insuring the property against fire and earthquake, and institutions usually quote other insurance separately. Always ask for the payment including insurance and compare it between banks with the E.A. next to it; do not compare only the advertised payment.

Deed, registration and other closing costs are not included either. Request the settlement statement in writing and review the guide to notary and registration fees when buying a used home. If you are considering residential leasing instead of a loan, the decree applies the 40 % cap and the insurance requirement to it, but not the 70 % and 80 % financing rule; the differences are explained in residential leasing vs. mortgage loan.

And an honest note: no simulator, including ours, assesses your credit. The example is not an offer; it is a way to go to the bank knowing what to ask.

If you are selling with that payment in mind

Buyers look at the monthly payment, not just the price. If you are selling a farm, plot or country house, put yourself in the buyer's shoes: does the price you are asking fit a loan, or will they have to pay almost everything in cash? A plot of land without a dwelling does not automatically qualify for the housing loan under Law 546; that law finances new or used housing, individual construction or improvements to used housing. If your listing is land only, tell the buyer to confirm with the lender whether they qualify before counting on the 70 %.

As a reference for asking prices (not closing or appraisal prices), according to Colombia Move listings on 15 November 2026, the median asking price is $850 million for farms for sale, $400 million for plots and $650 million for country houses. That day there were 37 farms, 45 plots and 26 country houses for sale in the site's search. You can look at the farms category or the entire housing section to locate your property.

A listing that is easy to finance has a clear price, states whether there is a dwelling or not, shows the real condition and has up-to-date papers. Listing on Colombia Move charges no sales commission.

Frequently asked questions

❓ How do I convert an annual effective rate to a monthly rate?

Apply i = ((1 + rate)^(1/12)) − 1, with the rate in decimal. That i goes into the annuity formula. It is not the rate divided by 12: with a 12 % E.A. example, the equivalent monthly rate is about 0.95 %, not 1 % (verify with the official source).

❓ What is the payment on a $210 million loan over 20 years?

In the Colombia Move simulator example (15 November 2026), at 12 % E.A. and without insurance, the fixed payment is $2.223.109. That 12 % is not the market rate: replace it with the rate in your quote and add insurance (verify with the official source).

❓ How much do I need to earn for a housing loan?

The first payment cannot exceed 40 % of the verifiable household income, for VIS and non-VIS housing, according to Decree 583 of 2025. The bank may require less, and the simulator's 30 % is only a more prudent test, not a minimum approval requirement (verify with the official source).

❓ Can I make a principal prepayment without a fee?

Yes, total or partial prepayment carries no penalty under Law 546 of 1999. You choose whether the payment or the term goes down. The simulator example's saving applies only if the prepayment is used to reduce the term, as in that run (verify with the official source).

❓ Is a farm or a plot financed with the same formula?

The payment formula is the same if the bank grants a peso loan at a fixed rate. But Law 546 covers housing, not automatically a plot without construction. Confirm with the lender whether your property qualifies before counting on 70 % financing (verify with the official source).

❓ How do I sell my property safely and avoid scams?

Verify the property papers before listing, do not hand over original documents through chat, and meet the buyer in a public place or with their bank. Be wary of anyone offering to pay more or without seeing the property (verify with the official source).

❓ Where can I list my farm, plot or house so buyers can see it?

You can list it on Colombia Move, in the housing section, with photos, a description and direct contact via WhatsApp. The listing is visible on the property portal and in search engines, and interested buyers contact you without intermediaries.