Bankrate Mortgage Loan Calculator

Monthly Payment Formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is a Mortgage Loan Calculator?

Definition: This calculator computes the fixed monthly payment for a mortgage loan based on principal amount, interest rate, and loan term.

Purpose: It helps homebuyers and borrowers estimate their monthly mortgage payments before committing to a loan.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( M \) — Monthly payment (USD)
\( P \) — Loan principal amount (USD)
\( r \) — Monthly interest rate (annual rate ÷ 12, as decimal)
\( n \) — Number of payments (loan term in years × 12)

Explanation: This formula calculates the fixed payment needed to fully amortize (pay off) the loan over its term.

3. Importance of Mortgage Calculation

Details: Understanding monthly payments helps with budgeting, comparing loan offers, and determining affordable home prices.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (without % sign), and loan term in years. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates only principal and interest. Add property taxes, insurance, and PMI separately for total payment.

Q2: What's a typical interest rate?
A: Rates vary by market conditions, credit score, and loan type. Check current averages at Bankrate.com.

Q3: How does loan term affect payments?
A: Shorter terms (15 years) have higher payments but lower total interest. Longer terms (30 years) have lower payments but higher total interest.

Q4: What if I make extra payments?
A: Extra payments reduce principal faster, saving interest and potentially shortening the loan term.

Q5: How accurate is this calculator?
A: It provides precise principal+interest payments. Actual payments may vary with escrow items and rounding.