This comprehensive **loan calculator mortgage** tool helps you accurately determine your potential monthly payments, overall interest, and amortization schedule. Simply enter your loan details to get started.
Mortgage Payment Calculator
Calculation Summary
Enter your inputs and click ‘Calculate’ to see the detailed steps.
Mortgage Payment Formula
The standard fixed-rate mortgage payment (P&I) formula is:
$$ M = P \frac{r(1+r)^n}{(1+r)^n – 1} $$Where:
- $M$: Monthly Payment
- $P$: Principal Loan Amount
- $r$: Monthly Interest Rate ($I / 1200$)
- $n$: Total Number of Payments (Loan Term in Years $\times$ 12)
Formula Source: Investopedia, The Balance
Input Variables Explained
Understanding the key inputs ensures you get an accurate result:
- Loan Principal (P): The total amount of money borrowed (e.g., house price minus down payment).
- Annual Interest Rate (I): The annual percentage rate (APR) charged by the lender. This is converted to a monthly rate for calculation.
- Loan Term (N): The number of years over which you will repay the loan (e.g., 15 years, 30 years).
- Monthly Payment (M): (Optional Input) The fixed amount paid each month. If you enter this, the calculator solves for the maximum Principal (P) you can afford.
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Explore other financial tools to assist with your planning:
- Affordability & Home Budget Calculator
- Refinancing Savings Calculator
- Amortization Schedule Generator
- Debt-to-Income (DTI) Ratio Calculator
What is a Loan Calculator / Mortgage?
A loan or mortgage calculator is a crucial financial tool used to estimate the costs associated with borrowing money for a large purchase, typically real estate. The primary function is to compute the monthly payment amount required to fully amortize the loan (pay off principal and interest) over a specified term.
The calculated monthly payment typically includes the principal and interest (P&I). It usually does not include escrow items like property taxes or homeowner’s insurance, which means the final amount paid to the lender will be higher than the calculator’s P&I result. Always consult with a lender for a precise final monthly cost.
How to Calculate a Mortgage Payment (Example)
Follow these steps to manually calculate a fixed-rate monthly mortgage payment:
- Convert the Annual Rate: Divide the annual interest rate (I) by 1200 to get the monthly decimal rate (r). (e.g., 6% becomes 0.06 / 12 = 0.005).
- Determine Total Payments: Multiply the loan term in years (N) by 12 to find the total number of monthly payments (n). (e.g., 30 years * 12 = 360 payments).
- Apply the Formula: Plug the Principal (P), monthly rate (r), and total payments (n) into the P&I formula to solve for the Monthly Payment (M).
- Review Amortization: The calculated payment ensures the loan principal is fully paid off with interest by the end of the term.
Frequently Asked Questions (FAQ)
- How much interest will I pay over the life of the loan?
- The total interest paid is the sum of all monthly payments multiplied by the total number of payments, minus the original principal amount.
- Does this calculation include property taxes?
- No, this P&I calculator only includes Principal and Interest. Property taxes, insurance, and HOA fees (PITI components) must be added separately to determine the full monthly housing expense.
- What is amortization?
- Amortization is the process of gradually paying off debt over time in regular installments. Early payments primarily cover interest, while later payments allocate a greater amount toward the principal.
- Can I use this for other types of loans?
- Yes, the fundamental P&I formula applies to any amortized installment loan with a fixed rate, such as auto loans or personal loans.