1. What is a Mortgage Payment Calculator?

Definition: This calculator estimates monthly mortgage payments based on loan amount, interest rate, and loan term using Zillow's standard formula.

Purpose: It helps homebuyers and homeowners understand their potential mortgage obligations before applying for a loan.

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

3. Importance of Mortgage Calculation

Details: Accurate payment estimation helps with budgeting, loan comparison, and determining affordable home prices.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (e.g., 4.5 for 4.5%), and loan term in years (typically 15 or 30). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Does this include taxes and insurance?
A: No, this calculates principal and interest only. Add approximately 1-2% of home value annually for taxes and insurance.

Q2: How does interest rate affect payments?
A: Higher rates increase monthly payments significantly. A 1% rate increase on a $300,000 loan adds ~$180/month.

Q3: What's better - 15-year or 30-year mortgage?
A: 15-year loans have higher payments but lower interest costs. 30-year loans have lower payments but higher total interest.

Q4: How can I lower my monthly payment?
A: Options include larger down payment (reducing principal), lower interest rate (improve credit score), or longer loan term.

Q5: What's PMI and when is it required?
A: Private Mortgage Insurance (typically 0.5-1% of loan annually) is required for conventional loans with <20% down payment.