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 finances accordingly.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term.

3. Importance of Mortgage Calculation

Details: Understanding your monthly payment helps with budgeting, loan comparison, 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 the principal and interest portion of your payment. Your actual payment may include escrow for taxes and insurance.

Q2: What's a typical mortgage term?
A: Most common terms are 15 or 30 years, but other terms (10, 20, 25 years) are also available.

Q3: How does interest rate affect my payment?
A: Higher rates increase monthly payments significantly. Even a 0.5% difference can add up over the loan term.

Q4: 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 to show the true annual cost.

Q5: Can I reduce my total interest paid?
A: Yes, by making extra principal payments, choosing a shorter loan term, or refinancing to a lower rate when possible.