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 is the standard formula used by lenders to determine monthly mortgage payments.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

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 accounts for both principal repayment and interest charges, with payments structured so the loan is paid off exactly at the end of the term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting, comparing loan offers, and planning your financial future. Even small differences in interest rates can significantly impact total repayment amounts.

4. Using the Calculator

Tips: Enter the principal amount in dollars, interest rate as a percentage (without % sign), 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 loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.

Q3: What's the difference between APR and interest rate?
A: APR includes fees and other loan costs, while the interest rate is just the cost of borrowing the principal.

Q4: Can I calculate payments for adjustable-rate mortgages?
A: This calculator is for fixed-rate mortgages only. ARM payments can change after the initial fixed period.

Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans, but actual lender offers may vary slightly based on their specific terms.