This calculator uses standard amortized loan formulas to ensure accuracy and compliance with financial industry standards.
The **free mortgage loan calculator** is a powerful tool designed to estimate your monthly mortgage payments, loan amortization schedule, and the total cost of borrowing. Simply enter the Loan Amount, Interest Rate, and Term, and the calculator will solve for the Monthly Payment. You can also solve for any missing variable by leaving one input field blank.
Free Mortgage Loan Calculator
The missing variable is:
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free mortgage loan calculator Formula
The calculation is based on the standard fixed-rate loan amortization formula, which solves for the monthly payment ($M$).
$$M = P \frac{i(1+i)^n}{(1+i)^n – 1}$$
Where:
- $P$ is the Principal Loan Amount.
- $i$ is the monthly interest rate (Annual Rate $\div 1200$).
- $n$ is the total number of payments (Term in Years $\times 12$).
- $M$ is the Monthly Payment.
Formula Sources: Investopedia: Mortgage Payment Formula, Bankrate: Amortization
Variables
- Loan Principal Amount ($): The total amount of money borrowed (P).
- Annual Interest Rate (%): The yearly rate charged on the loan (R).
- Loan Term (Years): The duration over which the loan is scheduled to be repaid (N).
- Monthly Payment ($): The fixed amount paid by the borrower every month (M).
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What is free mortgage loan calculator?
A mortgage loan calculator is an online tool that utilizes the standard amortization formula to determine the financial aspects of a mortgage. Its primary function is to help prospective homeowners estimate their required monthly payments based on the principal loan amount, interest rate, and repayment term.
Beyond the simple monthly payment, a comprehensive mortgage calculator can also help borrowers understand how changes to variables—such as increasing the down payment (reducing the principal) or shortening the loan term—can dramatically affect the total interest paid over the life of the loan. This transparency is crucial for making informed financial decisions before committing to a long-term debt obligation.
These calculators are “free” because they are provided as a public service, allowing users to run endless scenarios without cost, making essential financial planning accessible to everyone.
How to Calculate free mortgage loan calculator (Example)
Here is a step-by-step example of calculating the monthly payment for a standard fixed-rate mortgage:
- Determine the Variables: Assume a Loan Principal ($P$) of $250,000, an Annual Interest Rate ($R$) of 4.0%, and a Loan Term ($N$) of 30 years.
- Calculate the Monthly Interest Rate ($i$): Convert the annual rate to a monthly decimal: $i = (4.0\% / 100) / 12 = 0.003333$.
- Calculate the Total Number of Payments ($n$): Convert the term to months: $n = 30 \text{ years} \times 12 \text{ months/year} = 360 \text{ payments}$.
- Apply the Formula: Substitute these values into the payment formula: $$M = \$250,000 \frac{0.003333 \times (1+0.003333)^{360}}{(1+0.003333)^{360} – 1}$$
- Result: The calculated Monthly Payment ($M$) would be approximately $1,193.54.
Frequently Asked Questions (FAQ)
The principal is the original amount of money you borrowed. The interest is the cost of borrowing that money, calculated as a percentage of the remaining principal balance.
No. This calculator only computes the Principal and Interest (P&I) portion of your payment. To find your full monthly escrow payment (PITI), you must manually add estimated Property Taxes, Homeowner’s Insurance, and Private Mortgage Insurance (PMI).
A shorter term (e.g., 15 years) results in a higher monthly payment but significantly reduces the total interest paid over the life of the loan, saving you tens of thousands of dollars.
Yes. By entering your desired Monthly Payment, the Interest Rate, and the Term, and leaving the Loan Principal Amount blank, the calculator will solve for the maximum Principal you can afford with that payment.