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 calculation accounts for both principal and interest payments.

2. How Does the Calculator Work?

The calculator uses the standard 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 pays off the loan exactly over the term, with each payment covering both interest and principal.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and financial planning. Even small rate changes can significantly impact your monthly payment and total interest paid over the life of the loan.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your estimated monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: How does a higher interest rate affect my payment?
A: Higher rates increase both your monthly payment and total interest paid. A 1% rate increase on a $300,000 loan can add $150-$200 to your monthly payment.

Q2: Should I choose a shorter loan term?
A: Shorter terms have higher monthly payments but much less total interest. A 15-year loan typically has a lower rate than a 30-year loan.

Q3: Are property taxes and insurance included?
A: No, this calculates principal and interest only. Your actual payment may include escrow for taxes and insurance.

Q4: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans. For ARMs or loans with PMI, consult a mortgage professional.

Q5: Can I calculate how much I'll save by refinancing?
A: Yes, compare your current payment with a new loan's payment. Don't forget to factor in closing costs.