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. It accounts for both principal and interest payments, with the payment amount remaining constant throughout the loan term.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

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

Explanation: The formula calculates the fixed payment needed to pay off the loan in full, including interest, by the end of the term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and financial planning. It shows how much of each payment goes toward principal vs. interest and the total cost of borrowing.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this include property taxes and insurance?
A: No, this calculates only principal and interest. Your actual payment may include escrow for taxes and insurance.

Q2: How does a larger down payment affect the payment?
A: A larger down payment reduces the principal (P), resulting in a lower monthly payment.

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

Q4: How does refinancing affect my payments?
A: Refinancing at a lower rate reduces payments, but extending the term may increase total interest paid.

Q5: What's an amortization schedule?
A: A table showing how each payment is split between principal and interest over the life of the loan.