1. What is the Home Loan Payment Formula?

The home loan 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 loan payment formula:

Where:

• \( PMT \) — Monthly payment
• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (APR ÷ 12)
• \( n \) — Total number of payments (years × 12)

Explanation: The formula calculates the fixed payment that pays off the loan with interest over the specified term.

3. Understanding Loan Amortization

Details: In the early years of a mortgage, most of the payment goes toward interest. Over time, more of each payment is applied to the principal. This calculator shows the total cost over the life of the loan.

4. Using the Calculator

Tips: Enter the loan amount in dollars, APR as a percentage (e.g., 3.5 for 3.5%), and loan term in years. The calculator will show your estimated monthly payment, total repayment, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both the interest rate and other loan costs, giving a more complete picture of the loan's cost.

Q2: How does loan term affect payments?
A: Longer terms mean lower monthly payments but higher total interest paid over the life of the loan.

Q3: Are property taxes and insurance included?
A: No, this calculates principal and interest only. Your actual payment may include escrow for taxes and insurance.

Q4: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter loan term, or secure a lower interest rate.

Q5: What if I want biweekly payments?
A: Divide the monthly payment by 2 and make payments every 2 weeks (26 payments/year = 13 monthly payments).