This interactive tool helps you determine your monthly mortgage payment and visualize the complete breakdown of principal and interest payments over the life of your loan. Enter your desired loan amount, annual interest rate, and term to get started.
Mortgage Calculator with Amortization
Estimated Monthly Payment:
$0.00
Total Interest Paid: $0.00
Full Amortization Schedule
Mortgage Payment Formula
The standard formula used to calculate the fixed monthly payment (M) for a fixed-rate mortgage is based on the principal, interest rate, and number of payments.
Monthly Payment (M)
M = P [ r(1 + r)ⁿ / ((1 + r)ⁿ - 1) ]
Where:
P = Principal Loan Amountr = Monthly Interest Rate (Annual Rate / 12)n = Total Number of Payments (Loan Term in Years * 12)
Variables Explained
Understanding the inputs is crucial for accurate mortgage calculations:
- Loan Amount: The initial principal amount borrowed from the lender.
- Annual Interest Rate (%): The yearly cost of borrowing funds, expressed as a percentage. This is divided by 12 to get the monthly rate.
- Loan Term (Years): The duration over which the loan is scheduled to be repaid (e.g., 15 years or 30 years).
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What is a Mortgage Calculator with Amortization?
A mortgage calculator with amortization is an essential financial tool that provides two key pieces of information: the fixed monthly payment required to pay off a loan over a specified term, and a detailed schedule (amortization table) showing how that payment is distributed between principal and interest over time.
Amortization refers to the process of gradually paying off debt over time in fixed installments. In the initial years of a mortgage, a larger portion of the monthly payment goes toward interest. As the loan balance decreases, a greater portion of the payment is applied to the principal, accelerating the payoff. This calculator visualizes that critical shift.
How to Calculate a Mortgage Payment (Example)
Let’s use an example to illustrate the calculation steps:
- Define Variables: Assume a Loan Amount (P) of $300,000, an Annual Interest Rate of 6.0% (0.06), and a Loan Term of 30 years.
- Calculate Monthly Rate (r): 0.06 / 12 = 0.005 (or 0.5%).
- Calculate Total Payments (n): 30 years * 12 months/year = 360 payments.
- Apply Formula: Substitute these values into the monthly payment formula (M).
- Result: The calculated monthly payment (M) would be approximately $1,798.65.
- Generate Schedule: The amortization schedule then takes this $1,798.65 payment and breaks down how much is principal and how much is interest for each of the 360 payments.
Frequently Asked Questions (FAQ)
Since mortgages are typically long-term loans, small changes in the annual interest rate can lead to significant differences in the total interest paid over the loan term. Higher rates result in a substantially higher overall cost.
What does ‘amortization’ mean?Amortization is the process of paying off a debt with a fixed, regular payment schedule. Each payment includes a portion of principal and a portion of interest, structured so the balance reaches zero at the end of the term.
Does this calculation include property taxes or insurance?No, this calculator strictly computes the Principal and Interest (P&I) portion of your payment. It does not include escrows for Property Taxes, Homeowner’s Insurance, or HOA fees (often called PITI).
Can I use this for other types of loans?Yes, the core mathematical formula applies to any fully amortizing loan, such as auto loans or personal loans, provided the payment frequency is monthly.