1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment (PMT) required to fully amortize a loan over its term. It accounts for the principal amount (P), monthly interest rate (r), and number of payments (n).

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of payments (loan term in years × 12)

Additional Payments: The calculator also shows the impact of making extra payments each month, including interest savings and reduced loan term.

3. Benefits of Additional Payments

Details: Even small additional payments can significantly reduce total interest paid and shorten the loan term. Early extra payments have the greatest impact.

4. Using the Calculator

Tips: Enter the principal amount, annual interest rate, loan term in years, and optional additional payment. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How much can I save with additional payments?
A: Savings depend on the loan amount, interest rate, and size of extra payments. Even $50-100 extra per month can save thousands in interest.

Q2: Should I pay extra principal or invest?
A: Compare your mortgage rate with expected investment returns. Paying down higher-interest debt usually takes priority.

Q3: Are there prepayment penalties?
A: Most modern mortgages don't have prepayment penalties, but check your loan terms to be sure.

Q4: How often should I make additional payments?
A: Regular monthly extra payments are most effective, but lump sums (like tax refunds) can also help.

Q5: Does this work for all loan types?
A: This calculator works best for fixed-rate mortgages. ARMs require more complex calculations.