Use this **Simple Mortgage Calculator** to quickly estimate your monthly payment, total interest paid, and total cost of the loan based on the principal amount, interest rate, and term.
Simple Mortgage Calculator
Total Payments:
Detailed Amortization Calculation
Simple Mortgage Calculator Formula
The standard formula for calculating a fixed monthly mortgage payment (M) is based on the amortization formula:
M = P * [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]
Where:
- P = Principal Loan Amount
- i = Monthly interest rate (Annual Rate / 1200)
- n = Total number of payments (Loan Term in Years * 12)
- M = Monthly Payment
Variables Explained
- Loan Amount (P): The total amount of money borrowed from the lender. This is the principal amount that must be repaid.
- Annual Interest Rate (I): The yearly cost of the loan, expressed as a percentage. This rate is divided by 12 to get the monthly rate.
- Loan Term in Years (N): The scheduled time period over which you will repay the loan. Typically 15 or 30 years.
What is a Simple Mortgage Calculator?
A simple mortgage calculator is a tool designed to quickly estimate the fundamental costs associated with a home loan, primarily the monthly payment. It simplifies complex amortization schedules into a straightforward interface where users input the three core variables: the amount borrowed (principal), the annual interest rate, and the loan term.
Its purpose is to provide an immediate financial snapshot, helping prospective homeowners and refinancers understand how changes in interest rates or loan terms will impact their budget. While it doesn’t account for taxes, insurance, or other fees (known as PITI components), the monthly principal and interest payment it calculates is the foundation of every mortgage payment.
How to Calculate a Simple Mortgage Payment (Example)
Let’s use an example: Loan Amount ($300,000), Annual Rate (6.0%), Term (30 Years).
- Determine Monthly Interest Rate (i): Divide the annual rate by 1200. $6.0\% / 1200 = 0.005$.
- Determine Total Payments (n): Multiply the term in years by 12. $30 \text{ years} \times 12 = 360 \text{ payments}$.
- Calculate the Payment Factor: Compute the complex term $\frac{i(1 + i)^n}{(1 + i)^n – 1}$.
- Solve for Monthly Payment (M): Multiply the Loan Amount (P) by the Payment Factor. $M = \$300,000 \times \text{Factor}$.
- Determine Total Interest: Multiply the monthly payment (M) by the total payments (n) and subtract the original loan amount (P).
Related Calculators
Explore other financial tools:
- Refinance Savings Calculator
- Amortization Schedule Planner
- Home Equity Loan Calculator
- Debt-to-Income Ratio Estimator
Frequently Asked Questions (FAQ)
A longer loan term (e.g., 30 years) results in a lower monthly payment because you are spreading the repayment over more time. However, you will pay significantly more total interest over the life of the loan.
The principal is the original amount of money you borrowed. Your monthly payment covers both the interest charged and a portion of the principal. Paying down the principal is how you build equity in your home.
No. This calculation is for Principal and Interest (P&I) only. Your final monthly bill often includes escrow for Property Taxes, Homeowner’s Insurance, and sometimes Mortgage Insurance (PMI), making the total payment higher.
Yes, by making extra payments toward your principal. The calculator can show you how much faster you could pay off the loan by adding a fixed extra amount to your calculated monthly payment.