Calculate Monthly Mortgage Payments

Mortgage Payment Formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Monthly Payment (M):

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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 the principal amount, interest rate, and loan duration.

2. How Does the Calculator Work?

The calculator uses the mortgage payment formula:

\[ M = P \times \frac{r(1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( M \) — Monthly mortgage payment
\( P \) — Principal loan amount (USD)
\( r \) — Monthly interest rate (decimal)
\( n \) — Number of payments (months)

Explanation: The formula calculates the fixed payment that pays off the loan with interest over the specified term.

3. Importance of Mortgage Calculation

Details: Understanding your monthly payment helps with budgeting and comparing different loan options. It shows how much interest you'll pay over the life of the loan.

4. Using the Calculator

Tips: Enter the loan amount 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 rate by 12 (months) and convert from percentage to decimal (e.g., 6% APR = 0.06/12 = 0.005 monthly).

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

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

Q4: Can I calculate payments for other loans?
A: Yes, this works for any fixed-rate, fully amortizing loan (car loans, personal loans, etc.).

Q5: How accurate is this calculator?
A: It provides precise calculations for fixed-rate loans. For ARMs or loans with fees, consult your lender.