Mortgage Payment Calculator

Mortgage Payment Formula:

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

Monthly Payment:

Total Payment:

Total Interest:

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 standard equation accounts for principal, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

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

Where:

$ M $ — Monthly mortgage payment
$ P $ — Principal loan amount ($)
$ 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, resulting in the loan being paid off exactly at the end of the term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting, comparing loan options, and making informed decisions about home affordability. It also shows how much interest you'll pay over the life of the loan.

4. Using the Calculator

Tips: Enter the total loan amount (after down payment), annual interest rate (APR), 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 payments?
A: A larger down payment reduces the principal (P), resulting in lower monthly payments and less total interest.

Q3: What's better - shorter term or lower rate?
A: Shorter terms build equity faster but have higher payments. Lower rates reduce both monthly and total costs.

Q4: How does extra principal payment affect the loan?
A: Extra payments reduce principal faster, shortening the loan term and saving significant interest.

Q5: Are there different types of mortgage calculations?
A: This is for fixed-rate loans. ARMs have different calculations that account for rate changes.