Use this interactive Excel Mortgage Calculator to quickly determine your monthly payments, required loan amount, or necessary loan term based on the three other variables. Simply leave the field you wish to solve blank.
Excel Mortgage Calculator
Calculated Result
Calculation Breakdown
Detailed steps will appear here after calculation.
Excel Mortgage Calculator Formula
M = P \frac{i(1+i)^n}{(1+i)^n – 1}
Where: M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate (Annual Rate / 1200), n = Total Number of Payments (Loan Years × 12).
Formula Source: Investopedia, Wikipedia
Variables Used in the Calculator
- Loan Amount (P): The initial principal balance borrowed from the lender.
- Annual Interest Rate (I): The annual rate applied to the outstanding principal, expressed as a percentage.
- Loan Term (N): The total time (in years) over which the loan will be repaid.
- Monthly Payment (M): The fixed amount paid to the lender each month.
What is an Excel Mortgage Calculator?
An Excel Mortgage Calculator, or a mortgage amortization calculator, is a financial tool used to determine the necessary monthly payments for a home loan. By modeling the complex mathematical formulas used in banking, it allows users to project the total cost of borrowing, the interest paid over the life of the loan, and the principal reduction schedule.
The primary benefit of using a calculator like this is planning and budgeting. It enables prospective homeowners to understand how changes in the interest rate, the loan term, or the principal amount directly impact the cash flow required monthly. Unlike simple interest calculations, a mortgage uses compound interest, where interest is paid on the remaining principal balance, making an automated tool essential for accuracy.
This tool is fundamentally based on the concept of an ordinary annuity, where a series of equal payments (M) are made at regular intervals (monthly) to amortize (pay down) a present value debt (P).
How to Calculate Monthly Payment (Example)
- Determine the Inputs: Assume a Loan Amount (P) of $250,000, an Annual Interest Rate (I) of 6.0%, and a Loan Term (N) of 30 years.
- Calculate Monthly Rate (i): Convert the annual rate to a monthly decimal: $i = 0.06 / 12 = 0.005$.
- Calculate Total Periods (n): Convert years to months: $n = 30 \times 12 = 360$ payments.
- Apply the Formula: Substitute the values into the monthly payment formula: $M = 250,000 \times \frac{0.005(1+0.005)^{360}}{(1+0.005)^{360} – 1}$.
- Solve for M: The resulting monthly payment (M) would be approximately $1,498.88.
Related Calculators
- Loan Repayment Schedule
- Compound Interest Growth Calculator
- Debt Consolidation Savings Tool
- Loan Term Comparison Tool
Frequently Asked Questions (FAQ)
What is the difference between APR and Interest Rate?
The Interest Rate is the primary cost of borrowing, while the Annual Percentage Rate (APR) includes the interest rate plus other costs, like loan origination fees, making it a more comprehensive measure of the loan’s total cost.
Can this calculator solve for the interest rate?
Yes. By leaving the Annual Interest Rate blank and filling in the Loan Amount, Loan Term, and Monthly Payment, the calculator will use an iterative numerical method to accurately estimate the required interest rate.
What happens if I overpay on my mortgage?
If you make extra payments, the principal balance is reduced faster, leading to a reduction in the total interest paid and potentially shortening the loan term. This calculator only models standard payments but illustrates the required minimum.
Why does my Excel calculation differ from this calculator?
Differences often arise from rounding rules or the compounding frequency used (monthly, daily, or annual). This calculator uses standard monthly compounding, common for U.S. mortgages. Ensure your Excel PMT function uses the correct monthly rate and period number.