1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. This calculation accounts for both principal and interest payments.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

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

Explanation: The formula calculates the fixed payment that will pay off the loan principal plus interest over the specified term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and financial planning. It shows how much goes toward principal vs. interest each month.

4. Using the Calculator

Tips: Enter the loan amount in USD, annual interest rate as a percentage (e.g., 3.5 for 3.5%), and loan term in years. All values must be positive numbers.

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 a larger down payment affect my payment?
A: A larger down payment reduces the principal amount, resulting in a lower monthly payment.

Q3: What's the difference between 15-year and 30-year mortgages?
A: Shorter terms have higher monthly payments but pay less total interest. Longer terms have lower payments but more total interest.

Q4: How does interest rate affect my payment?
A: Higher rates increase both your monthly payment and total interest paid over the life of the loan.

Q5: Can I pay extra to pay off my loan faster?
A: Yes, additional principal payments reduce the loan balance faster and can shorten the loan term.