1. What is a Mortgage Payment Calculator?

Definition: This calculator computes the fixed monthly payment for a mortgage loan using the standard amortization formula.

Purpose: It helps borrowers estimate their monthly mortgage payments based on loan amount, interest rate, and term.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( M \) — Monthly 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 calculates the fixed payment amount that will pay off the loan over its term, including both principal and interest.

3. Importance of Payment Calculation

Details: Accurate payment estimation helps borrowers budget effectively, compare loan offers, and understand the long-term cost of their mortgage.

4. Using the Calculator

Tips: Enter the loan amount (principal), 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 property taxes and insurance?
A: No, this calculates only principal and interest. Your actual payment may include escrow for taxes and insurance.

Q2: How does the interest rate affect my payment?
A: Higher rates increase monthly payments significantly. A 1% rate change can affect payments by $50-$100 per $100,000 borrowed.

Q3: What's the difference between 15-year and 30-year terms?
A: Shorter terms have higher monthly payments but much less total interest paid over the life of the loan.

Q4: Can I calculate payments for other types of loans?
A: Yes, this formula works for any fixed-rate installment loan (car loans, personal loans, etc.).

Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans. For ARMs or loans with fees, consult your lender.