Mortgage Payment Formula:
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Definition: This calculator estimates the monthly mortgage payment based on loan principal, interest rate, and loan term.
Purpose: It helps homebuyers and borrowers understand their potential monthly mortgage payments before committing to a loan.
The calculator uses the standard mortgage payment formula:
Where:
Explanation: The formula accounts for both principal and interest payments over the life of the loan.
Details: Accurate payment estimation helps with budgeting, loan comparison, and determining affordable home prices.
Tips: Enter the loan amount in USD, annual interest rate (percentage), and loan term in years. All values must be > 0.
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 the interest rate affect my payment?
A: Higher rates increase monthly payments significantly over the life of the loan.
Q3: What's the difference between 15-year and 30-year terms?
A: Shorter terms have higher monthly payments but pay less total interest over the loan's life.
Q4: How accurate is this estimator?
A: It provides standard payment estimates but actual loan terms may vary based on credit and other factors.
Q5: Can I calculate payments for different payment frequencies?
A: This calculator assumes monthly payments. Other frequencies require different calculations.