New Mortgage Payment Calculator

Mortgage Payment Formula:

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

Monthly Payment:

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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. This formula is based on the time value of money principle and ensures each payment covers both principal and interest.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

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

Where:

$ P $ — Principal loan amount ($)
$ r $ — Monthly interest rate (annual rate ÷ 12)
$ n $ — Total number of payments (loan term in years × 12)

Explanation: This formula calculates the fixed monthly payment that will pay off the entire loan amount plus interest over the specified term.

3. Importance of Mortgage Payment Calculation

Details: Accurate mortgage payment calculation is essential for budgeting, loan comparison, and determining affordability when purchasing property or refinancing existing loans.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in a typical mortgage payment?
A: This calculation shows principal and interest only. Actual payments may include property taxes, insurance, and PMI if applicable.

Q2: How does interest rate affect monthly payments?
A: Higher interest rates significantly increase monthly payments. A 1% rate increase can raise payments by 10-15% depending on the loan amount and term.

Q3: What's the difference between 15-year and 30-year mortgages?
A: 15-year mortgages have higher monthly payments but much less total interest paid. 30-year mortgages have lower monthly payments but more total interest over the loan life.

Q4: Can I pay extra on my mortgage?
A: Yes, making extra payments reduces the principal faster and can significantly shorten the loan term and reduce total interest paid.

Q5: What factors determine mortgage eligibility?
A: Lenders consider credit score, debt-to-income ratio, employment history, down payment amount, and property value when approving mortgages.