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. It accounts for both principal and interest payments.

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)
• \( PMT \) — Monthly payment amount (USD)

Explanation: The formula calculates the fixed payment that pays off the loan exactly over the term, with each payment covering both interest and principal.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and financial planning. It shows how much interest you'll pay over the life of the loan.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What's included in a mortgage payment?
A: This calculator shows principal and interest. Actual payments may include property taxes and insurance (PITI).

Q2: How does loan term affect payments?
A: Shorter terms mean higher monthly payments but less total interest. Longer terms lower monthly payments but increase total interest.

Q3: What's amortization?
A: The process of paying off debt with regular payments over time. Early payments are mostly interest; later payments are mostly principal.

Q4: How can I pay less interest?
A: Make extra principal payments, choose a shorter term, or refinance at a lower rate when possible.

Q5: Are there other loan types?
A: This calculator is for fixed-rate loans. Adjustable-rate mortgages (ARMs) have payments that can change over time.