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:

• \( P \) — Monthly payment
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( PV \) — Loan principal amount (present value)
• \( n \) — Total number of payments (term in 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: Accurate mortgage calculations help borrowers understand their financial commitments, compare loan options, and budget effectively for home ownership.

4. Using the Calculator

Tips: Enter the loan amount in dollars, 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. A complete mortgage payment may include taxes, insurance, and PMI.

Q2: How does a higher interest rate affect payments?
A: Higher rates increase monthly payments significantly over the life of the loan.

Q3: What's better - 15-year or 30-year mortgage?
A: 15-year has higher payments but less total interest. 30-year has lower payments but more total interest paid.

Q4: How much can I borrow?
A: Lenders typically limit payments to 28-31% of gross monthly income, depending on other debts.

Q5: Can I pay off my mortgage early?
A: Yes, but check for prepayment penalties. Extra payments reduce principal and total interest.