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 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 calculates the fixed payment that covers both principal and interest each month, ensuring the loan is paid off by the end of the term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and financial planning. It shows how much of each payment goes toward principal vs. interest.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How does interest rate affect my payment?
A: Higher rates increase monthly payments significantly. A 1% rate increase can raise payments by 10% or more on a 30-year loan.

Q2: What's better - shorter term or lower rate?
A: Shorter terms mean higher payments but less total interest paid. Lower rates reduce both monthly payments and total interest.

Q3: How much can I save by making extra payments?
A: Even small additional principal payments can shorten your loan term and save thousands in interest.

Q4: Are property taxes and insurance included?
A: No, this calculates principal and interest only. Your actual payment may include escrow for taxes and insurance.

Q5: How does loan term affect total cost?
A: Longer terms have lower monthly payments but cost more in total interest over the life of the loan.