Mortgage Calculator

Mortgage Payment Formula:

\[ M = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment:

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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 finances accordingly.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ M = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

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 required to fully amortize the loan over its term.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers understand affordability, compare loan options, and budget for homeownership costs.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (as a percentage), 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 principal and interest. Your actual payment may include property taxes, insurance, and PMI.

Q2: What's a typical mortgage term?
A: Most common terms are 15 or 30 years, but other terms (10, 20, 40 years) may be available.

Q3: How does the interest rate affect payments?
A: Higher rates increase monthly payments. Even 0.5% difference can significantly impact your payment over time.

Q4: What if I want bi-weekly payments?
A: Divide the monthly payment by 2 and pay every 2 weeks (26 payments/year = 13 monthly payments).

Q5: How much interest will I pay over the loan term?
A: Total interest = (Monthly payment × Term in months) - Principal. Consider an amortization schedule for details.