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 the principal amount, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( PMT \) — Monthly payment (USD)
• \( PV \) — Loan amount or principal (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (years × 12)

Explanation: The formula calculates the fixed payment needed to pay off the loan with interest over the specified term.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and comparing different loan options. It shows how much of each payment goes toward principal vs. interest.

4. Using the Calculator

Tips: Enter 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 the payment?
A: A larger down payment reduces the loan amount (PV), resulting in a lower monthly payment.

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

Q4: How does interest rate affect the payment?
A: Higher rates increase monthly payments significantly. Even 0.5% can make a noticeable difference over the loan term.

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