1. What is a Mortgage Calculator?

Definition: This calculator estimates your monthly mortgage payment based on the loan amount, interest rate, and loan term.

Purpose: It helps homebuyers and homeowners understand their potential mortgage payments and budget accordingly.

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

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

Explanation: The formula accounts for both principal and interest payments over the life of the loan.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting, comparing loan offers, and determining how much house you can afford.

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. Your actual payment may include escrow for taxes and insurance.

Q2: What's a typical interest rate?
A: Rates vary by market conditions and credit score. As of 2023, rates range from 6% to 8% for conventional loans.

Q3: Should I choose a 15-year or 30-year term?
A: 15-year loans have higher payments but lower interest costs. 30-year loans have lower payments but higher total interest.

Q4: How does a larger down payment affect my payment?
A: A larger down payment reduces your principal (P), which directly lowers your monthly payment.

Q5: Can I estimate total interest paid?
A: Yes, multiply the monthly payment by number of payments, then subtract the principal.