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 the principal amount, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

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

Explanation: The formula calculates the fixed payment that covers both principal and interest each month until the loan is paid off.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting, comparing loan options, and making informed decisions about home affordability.

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: 15-year loans have higher monthly payments but pay less total interest. 30-year loans have lower payments but cost more overall.

Q4: How does interest rate affect the payment?
A: Higher rates increase both the monthly payment and total interest paid over the life of the loan.

Q5: Can I calculate payments for adjustable-rate mortgages?
A: This calculator is for fixed-rate mortgages only. ARMs have payments that change when rates adjust.