1. What is a Mortgage Calculator?

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

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

2. How Does the Calculator Work?

The calculator uses the standard mortgage formula:

Where:

• \( M \) — Monthly payment (USD)
• \( P \) — Loan principal (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of payments (term in months)

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

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers understand affordability, compare loan options, and plan long-term finances.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

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: What's the difference between APR and interest rate?
A: The interest rate is the cost of borrowing, while APR includes fees and other loan costs.

Q3: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid over the life of the loan.

Q4: What's a typical down payment?
A: Conventional loans often require 20%, but some programs allow as little as 3-5%.

Q5: How can I pay less interest overall?
A: Make extra principal payments, choose a shorter term, or refinance at a lower rate when possible.