1. What is the Mortgage Payment Formula?

The mortgage payment formula calculates the fixed monthly payment required to fully amortize a loan over its term. It accounts for both principal and interest payments.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Number of monthly payments (term in months)

Explanation: The formula calculates the fixed payment needed to pay off the loan completely over its term, with each payment covering both interest and principal.

3. Importance of Mortgage Calculation

Details: Understanding your mortgage payment helps with budgeting and financial planning. It shows how much of each payment goes toward principal vs. interest.

4. Using the Calculator

Tips: Enter principal in USD, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How do I convert APR to monthly rate?
A: Divide the annual percentage rate (APR) by 12 (months) and convert from percentage to decimal (e.g., 6% APR = 0.06/12 = 0.005 monthly rate).

Q2: What's included in the monthly payment?
A: This calculates principal and interest only. Actual payments may include taxes, insurance, and PMI if applicable.

Q3: How does loan term affect payments?
A: Longer terms reduce monthly payments but increase total interest paid. Shorter terms have higher payments but lower total interest.

Q4: What about adjustable-rate mortgages?
A: This calculator assumes a fixed rate. For ARMs, payments will change when the rate adjusts.

Q5: Can I calculate extra payments?
A: This shows the standard payment. Extra payments would require a more advanced amortization calculator.