Home
Back
Mortgage Payment Formula:
| From: | To: |
The Mortgage Payment Calculator uses the standard amortization formula to calculate your monthly mortgage payment based on the principal amount, interest rate, and loan term. This helps homebuyers understand their financial commitment before purchasing a property.
The calculator uses the mortgage payment formula:
Where:
Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest.
Details: Accurate mortgage payment calculation is essential for budgeting, determining affordability, comparing loan offers, and financial planning. It helps borrowers understand their long-term financial commitment.
Tips: Enter the principal amount in dollars, annual interest rate as a percentage (e.g., 4.5 for 4.5%), and loan term in years. All values must be positive numbers.
Q1: What's included in the monthly payment?
A: This calculation includes principal and interest only. Actual payments may include property taxes, insurance, and PMI if applicable.
Q2: How does interest rate affect the payment?
A: Higher interest rates significantly increase monthly payments. A 1% rate increase can raise payments by 10-15% depending on the loan amount.
Q3: What is amortization?
A: Amortization is the process of paying off a loan through regular payments over time, where early payments are mostly interest and later payments are mostly principal.
Q4: Can I calculate payments for different loan terms?
A: Yes, you can compare 15-year vs 30-year mortgages to see how shorter terms increase monthly payments but reduce total interest paid.
Q5: Are there other costs to consider?
A: Yes, consider closing costs, property taxes, homeowners insurance, maintenance, and potential HOA fees when budgeting for home ownership.