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 formula accounts for both principal and interest payments.

2. How Does the Calculator Work?

The calculator uses the amortization formula:

Where:

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

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, comparing loan options, and planning for home ownership costs.

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 payments?
A: A larger down payment reduces the principal (P), resulting in lower monthly payments.

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

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

Q5: Can I calculate payments for adjustable-rate mortgages?
A: This calculator is for fixed-rate loans only. ARM payments change when the rate adjusts.