Mortgage Payment Formula:
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Definition: This calculator estimates your monthly mortgage payment based on loan amount, interest rate, and loan term.
Purpose: It helps homebuyers and homeowners understand their potential mortgage payments and compare different loan options.
The calculator uses the standard mortgage formula:
Where:
Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.
Details: Accurate mortgage calculations help with budgeting, loan comparison, and financial planning for home purchases.
Tips: Enter the loan amount, annual interest rate (without % sign), and loan term in years. All values must be > 0.
Q1: What's included in the monthly payment?
A: This calculates principal and interest only. Your actual payment may include taxes, insurance, and PMI.
Q2: How is interest calculated monthly?
A: The annual rate is divided by 12 to get the monthly rate (e.g., 6% annual = 0.5% monthly).
Q3: Does this work for other loans?
A: Yes, it works for any fixed-rate amortizing loan (car loans, personal loans, etc.).
Q4: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest paid.
Q5: What's the difference between total payment and total interest?
A: Total payment includes both principal and interest, while total interest is just the interest portion.