Use the most accurate Mortgage Calculator to estimate your monthly loan payments, factoring in principal, interest rate, and term. Based on data often used by industry leaders like Zillow, this tool helps you plan your home financing strategy effectively.
Mortgage Calculator
Estimated Monthly Payment (P&I)
$0.00
Detailed Calculation Breakdown
Mortgage Calculator Formula
The standard formula used to determine the fixed monthly payment (P&I) on a mortgage loan is:
M = P [ i(1 + i)^n / ((1 + i)^n – 1) ]
Formula Source: Investopedia – Mortgage Loan, Consumer Financial Protection Bureau (CFPB)
Variables Explained
The inputs for the calculator correspond to the variables in the formula:
- P (Principal Loan Amount): The total amount borrowed. Calculated as (Home Price – Down Payment).
- i (Monthly Interest Rate): The annual rate divided by 12 and converted to a decimal (e.g., 6.5% / 12 / 100).
- n (Number of Payments): The loan term in years multiplied by 12 (number of months).
- M (Monthly Payment): The result—your estimated monthly payment covering Principal and Interest.
Related Calculators
Explore other useful financial tools:
- Amortization Schedule Calculator
- Debt-to-Income Ratio (DTI) Calculator
- Home Affordability Calculator
- Refinance Break-Even Calculator
What is Mortgage Calculation?
Mortgage calculation is the process of determining the required periodic payments to fully amortize a loan over a set period. It is crucial for budgeting and understanding the true cost of homeownership. This calculator uses the standard compound interest formula to distribute the repayment of the principal amount and the accrued interest evenly across the loan term.
For instance, when comparing a 15-year versus a 30-year mortgage, the calculator quickly illustrates how the shorter term results in a higher monthly payment but significantly less total interest paid over the life of the loan. Tools like this, especially those associated with major real estate platforms, provide transparency in a complex financing process.
How to Calculate Mortgage Payment (Example)
Let’s use an example to walk through the calculation steps:
- Define Variables: Assume Home Price = $300,000, Down Payment = $60,000, Annual Rate = 6.0%, and Term = 30 Years.
- Calculate Principal (P): $300,000 – $60,000 = $240,000.
- Calculate Monthly Rate (i): 6.0% / 12 / 100 = 0.005.
- Calculate Total Payments (n): 30 years * 12 months/year = 360 payments.
- Plug into Formula: $M = \$240,000 \cdot \frac{0.005(1+0.005)^{360}}{(1+0.005)^{360} – 1}$.
- Solve: The resulting monthly payment, M, is approximately $1,438.99.
Frequently Asked Questions (FAQ)
Is the Zillow Mortgage Calculator always accurate?
While the calculation method (the standard amortization formula) is mathematically sound, real-world payments include additional factors like Property Taxes, Homeowner’s Insurance (collectively known as PITI), and potentially Private Mortgage Insurance (PMI), which are not included in this simple P&I calculator.
What is the difference between P&I and PITI?
P&I stands for Principal and Interest—the core loan repayment amount. PITI stands for Principal, Interest, Taxes, and Insurance, representing the total monthly housing payment often collected and escrowed by your lender.
How does a higher down payment affect my monthly payment?
A higher down payment reduces the Principal (P) you need to borrow. Since the payment calculation is based on the principal amount, reducing P directly reduces your monthly payment M.
Why is the interest rate so important?
The interest rate (i) is compounded monthly. A small change in the annual rate has a significant, compounding effect over 360 payments (30 years), dramatically increasing or decreasing the total cost of the loan over its lifetime.