The Home Affordable Modification Program (HAMP) focused on making monthly mortgage payments affordable for homeowners. Use this calculator to determine the initial Principal & Interest (P&I) payment based on standard loan terms before any modification.
HAMP Mortgage Payment Calculator
HAMP Mortgage Payment Formula
The calculation for the fixed monthly principal and interest (P&I) payment uses the following amortization formula:
M = P [ i(1 + i)ⁿ / (1 + i)ⁿ - 1 ]
Formula Source: Investopedia
Variables Used in the Calculation
- M: Monthly Payment (Principal & Interest) – The final result.
- P: Principal Loan Amount – The amount borrowed.
- i: Monthly Interest Rate – The Annual Interest Rate divided by 12.
- n: Total Number of Payments – The Loan Term (in years) multiplied by 12.
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What is HAMP Mortgage Calculator?
While the Home Affordable Modification Program (HAMP) officially ended, the term “HAMP Mortgage Calculator” is often used to refer to any tool that helps homeowners assess or manage their potential mortgage payments. HAMP was a federal program designed to help struggling homeowners lower their monthly mortgage payments to 31% of their gross income.
This calculator provides the baseline Principal and Interest payment for a standard fixed-rate loan. Understanding this initial payment is the first step before considering modification options, which might involve reducing the interest rate, extending the loan term, or deferring principal.
Accurate calculation is crucial for budgeting. A lower payment, achieved through modification or refinancing, can significantly impact a household’s financial stability. Always check modification options against your current financial situation.
How to Calculate HAMP Mortgage Payment (Example)
- Identify Variables: Assume a Principal (P) of $200,000, an Annual Rate (R) of 4.5%, and a Term (Y) of 30 years.
- Calculate Monthly Rate (i): Convert the annual rate to a decimal and divide by 12. $i = 0.045 / 12 = 0.00375$.
- Calculate Total Payments (n): Multiply the term by 12. $n = 30 \times 12 = 360$ payments.
- Solve the Formula: Substitute the values into the formula: $M = 200,000 \times [ 0.00375 \times (1 + 0.00375)^{360} / (1 + 0.00375)^{360} – 1 ]$.
- Result: The resulting Monthly P&I Payment is $1,013.37.
Frequently Asked Questions (FAQ)
- What was the main goal of the HAMP program?
- The primary goal of HAMP was to reduce the homeowner’s monthly mortgage payment to an affordable level, typically 31% of their verified gross monthly income.
- Does this calculator show the modified HAMP payment?
- No. This calculator determines the standard Principal & Interest payment. HAMP modifications involved complex calculations based on financial hardship, property value, and multiple steps (rate reduction, term extension, principal forbearance).
- Is the HAMP program still available?
- No, the Home Affordable Modification Program (HAMP) expired on December 31, 2016. However, various private and government modification programs still exist for homeowners facing financial difficulty.
- What fees are included in this monthly payment?
- This calculation only includes the Principal and Interest (P&I) portion of your payment. It excludes escrow items like property taxes, homeowner’s insurance, and Mortgage Insurance (PMI).