Use this comprehensive Mortgage Calculator to quickly determine your monthly payments, loan amount, interest rate, or total repayment term by simply leaving the variable you wish to solve for blank.
Mortgage Calculator
Calculated Monthly Payment:
$0.00Detailed Calculation Steps
Enter three of the four fields (Principal, Rate, Years, Monthly Payment) and click 'Calculate' to see the detailed steps here.
Mortgage Calculator Formula
The standard formula for calculating the monthly mortgage payment (M) is based on the amortization schedule, where:
Formula Sources: Wikipedia – Mortgage Calculator, CFPB
Variables
The calculator uses four core variables. You must enter values for three of them to solve for the fourth.
- Principal (P) / Loan Amount: The total amount of money borrowed.
- Annual Interest Rate (R): The yearly percentage rate charged by the lender.
- Loan Term (Y): The length of time, in years, over which the loan is scheduled to be repaid.
- Monthly Payment (M): The fixed amount paid each month, covering both principal and interest.
Related Calculators
Explore other financial tools to better manage your home financing and investment decisions:
- Amortization Schedule Calculator
- Refinance Savings Calculator
- Rent vs. Buy Calculator
- Mortgage Payoff Date Calculator
What is a Mortgage Calculator?
A mortgage calculator is an essential online tool designed to estimate the costs associated with borrowing money to purchase real estate. Its primary function is to calculate the monthly principal and interest payment (M) based on the loan’s fundamental terms: the principal amount (P), the annual interest rate (R), and the loan term in years (Y).
Beyond calculating the monthly payment, advanced mortgage calculators, like this one, function as flexible solvers. They can solve for any missing variable—be it the maximum loan amount you can afford given a target monthly payment, the required interest rate, or the necessary loan term—making them invaluable for financial planning, budgeting, and comparing different loan offers.
How to Calculate Monthly Payment (Example)
Assume a $250,000 loan, 6% annual rate, and a 30-year term:
- Determine Monthly Rate (i): Convert the annual rate to a monthly decimal: $i = 0.06 / 12 = 0.005$.
- Determine Total Payments (n): Multiply the term by 12: $n = 30 \text{ years} \times 12 = 360 \text{ payments}$.
- Calculate Amortization Factor: Compute the factor $A = \frac{(1+i)^n}{(1+i)^n – 1}$.
- Calculate Monthly Payment (M): Multiply the Principal by the factor and the monthly rate: $M = P \cdot i \cdot A$.
- Result: $M = \$250,000 \times 0.005 \times 5.9955… = \$1,498.88$.
Frequently Asked Questions (FAQ)
Here are answers to common questions about mortgage payments and calculations:
Is the monthly payment calculated here my final payment?
No. This calculation covers only the Principal and Interest (P&I). Your total payment (often called PITI) usually includes Property Taxes, Homeowner’s Insurance, and sometimes Private Mortgage Insurance (PMI).
What is the difference between Loan Term and Amortization Period?
The Amortization Period is the total time required to pay off the loan (usually 15, 20, or 30 years). The Loan Term is the length of the current contract before renewal, which may be shorter (e.g., a 5-year term on a 25-year amortization).
Why does the interest portion decrease over time?
Mortgage interest is calculated on the remaining principal balance. As you make payments, the principal balance decreases, meaning the next month’s interest charge is calculated on a smaller base, shifting more of your fixed payment toward principal reduction.
Can I solve for the Interest Rate if I know the other three variables?
Yes, while the exact formula is complex and requires numerical methods (like iteration), this calculator can accurately solve for the unknown Annual Interest Rate.