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 payment formula:

Where:

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

Explanation: The formula calculates the fixed payment that will pay off the entire loan (principal + interest) over the specified term.

3. Importance of Mortgage Calculation

Details: Understanding your monthly mortgage payment helps with budgeting, comparing loan options, and determining how much house you can afford.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term (in years or months). The calculator will compute your estimated monthly payment.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates only principal and interest. Your actual payment may include property taxes, homeowners insurance, and PMI if applicable.

Q2: How does a larger down payment affect my payment?
A: A larger down payment reduces the principal (P), which directly lowers your 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 interest rate affect my payment?
A: Higher rates significantly increase your monthly payment. Even a 0.5% difference can add up over the life of the loan.

Q5: Can I pay extra to pay off my mortgage early?
A: Yes, additional principal payments reduce the loan balance faster and can save thousands in interest.