Calculate Monthly Mortgage Payments

Mortgage Payment Formula:

\[ M = P \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (M):

1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. This formula accounts for both principal and interest payments.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

\[ M = P \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( M \) — Monthly payment (USD)
\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Number of payments (loan term in years × 12)

Explanation: The formula accounts for compound interest over the life of the loan, ensuring each payment covers both interest and principal reduction.

3. Understanding Mortgage Payments

Details: Mortgage payments are typically fixed for the loan term, with early payments weighted more toward interest and later payments more toward principal.

4. Using the Calculator

Tips: Enter the total loan amount, annual interest rate (as a percentage), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates only principal and interest (P&I). Actual mortgage payments may include taxes, insurance, and PMI.

Q2: How does interest rate affect payments?
A: Higher rates significantly increase monthly payments. A 1% rate increase can raise payments by 10-15% on a 30-year loan.

Q3: What's the difference between 15 and 30-year terms?
A: 15-year loans have higher monthly payments but much less total interest. 30-year loans have lower payments but more total interest.

Q4: Can I calculate payments for other loans?
A: Yes, this formula works for any fixed-rate amortizing loan (car loans, personal loans, etc.).

Q5: How accurate is this calculator?
A: It provides exact P&I payments for fixed-rate loans. Actual lender payments may vary slightly due to rounding.