1. What is a Mortgage Calculator by Zillow?

Definition: This calculator estimates the monthly mortgage payment based on loan amount, interest rate, and loan term.

Purpose: It helps homebuyers and homeowners understand their potential mortgage payments when purchasing or refinancing a home.

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: The formula calculates the fixed monthly payment that would pay off the mortgage over the specified term.

3. Importance of Mortgage Calculation

Details: Accurate mortgage calculations help borrowers understand affordability, compare loan options, and plan their finances.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (default 3.5%), and loan term in years (default 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. Your actual payment may include escrow for taxes and insurance.

Q2: What's a typical interest rate?
A: Rates vary by market conditions and borrower qualifications. As of 2023, rates typically range from 3% to 7%.

Q3: How does loan term affect payments?
A: Shorter terms (15 years) have higher monthly payments but lower total interest. Longer terms (30 years) have lower payments but more interest.

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.

Q5: Can I calculate payments for other loan types?
A: This formula works for fixed-rate mortgages. Adjustable-rate mortgages (ARMs) require different calculations.