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 loan 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 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 calculates the fixed monthly payment that would be required to pay off the loan over its term, including both principal and interest.

3. Importance of Mortgage Calculation

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

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Does this include property taxes and insurance?
A: No, this calculates only principal and interest. A complete mortgage payment (PITI) would include property taxes, insurance, and possibly PMI.

Q2: What's a typical interest rate?
A: Rates vary by market conditions, but historically range from 3% to 8% for conventional 30-year mortgages.

Q3: How does loan term affect payments?
A: Shorter terms (15 years) have higher monthly 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. Use an amortization calculator to see the impact.

Q5: Does this work for adjustable-rate mortgages (ARMs)?
A: No, this calculator is for fixed-rate mortgages only. ARMs have changing payments after the initial fixed period.