Mortgage Payment Calculator
Calculation
Monthly Payment = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
P=Principal, i=Monthly Rate, n=Months
Understanding Mortgage Payments
A mortgage payment calculator estimates the monthly payment required for a home loan, based on the principal loan amount, the annual interest rate, and the loan term (typically 15 or 30 years). The calculation usually includes principal and interest (P&I), which form the core payment that amortizes the loan over time. Some calculators may also allow adding estimated property taxes and homeowner's insurance (T&I) for a more complete PITI (Principal, Interest, Taxes, Insurance) estimate.
Mortgages, or loans secured by real estate, have a long history dating back to ancient legal systems. The modern amortizing mortgage, with regular payments covering both principal and interest, became widespread in the 20th century, particularly in the US after the Great Depression, to make homeownership more accessible and stable. Standardized calculation methods ensure consistency in lending practices.
This tool is essential for prospective homebuyers to estimate their housing costs and determine affordability. It allows comparison of different loan scenarios (e.g., varying down payments, interest rates, or loan terms) and helps in budgeting for one of the largest financial commitments most people undertake. Understanding the breakdown between principal and interest over time is also insightful for financial planning.