Mortgage Payment Calculator

Amortization Formula:

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

Monthly Payment:

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1. What is the Mortgage Payment Calculator?

The Mortgage Payment Calculator uses the standard amortization formula to determine your monthly mortgage payment based on the principal amount, interest rate, and loan term. This helps borrowers understand their financial commitment before taking out a mortgage.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

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

Where:

$ P $ — Principal loan amount ($)
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Total 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, accounting for both principal and interest.

3. Importance of Mortgage Calculation

Details: Understanding your monthly mortgage payment is crucial for budgeting and financial planning. It helps determine affordability and compare different loan options.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in the monthly payment?
A: This calculation includes principal and interest only. Your actual payment may include property taxes, insurance, and PMI if applicable.

Q2: How does interest rate affect the payment?
A: Higher interest rates significantly increase monthly payments. A 1% rate increase can raise payments by 10-15% depending on the loan amount and term.

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

Q4: Can I calculate payments for different loan types?
A: This calculator works for fixed-rate mortgages. Adjustable-rate mortgages (ARMs) require different calculations as rates change over time.

Q5: How accurate is this calculator?
A: This provides standard amortization calculations. Actual lender calculations may include additional fees or use slightly different rounding methods.