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Mortgage Payment Formula:
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The Mortgage Payment Calculator estimates your monthly house payment including principal and interest using the standard amortization formula. It helps you understand your financial commitment before purchasing a home.
The calculator uses the mortgage payment formula:
Where:
Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest.
Details: Understanding your monthly mortgage payment is crucial for budgeting, determining affordability, and making informed home-buying decisions. It helps ensure your housing costs remain within your financial means.
Tips: Enter the principal loan amount in dollars, annual interest rate as a percentage (e.g., 4.5 for 4.5%), and loan term in years. All values must be positive numbers.
Q1: What does this calculator include?
A: This calculator includes principal and interest payments only. It does not include property taxes, homeowners insurance, PMI, or HOA fees.
Q2: How is the monthly interest rate calculated?
A: Monthly rate = Annual rate ÷ 12. For example, 6% annual rate becomes 0.5% monthly rate (6 ÷ 12 = 0.5).
Q3: What is a typical mortgage term?
A: The most common mortgage terms are 15, 20, and 30 years. Shorter terms have higher monthly payments but less total interest paid.
Q4: Does this work for adjustable-rate mortgages?
A: This calculator is designed for fixed-rate mortgages. Adjustable-rate mortgages require different calculations as rates change over time.
Q5: How accurate is this calculator?
A: This provides a close estimate of your principal and interest payment. For exact figures, consult with your lender who can provide a formal loan estimate.