Enter the loan amount in your selected currency.
Enter the annual interest rate.
Enter the loan term in years.
Enter the down payment amount in your selected currency.
History:

Explanation

How to calculate your monthly mortgage payment?

To calculate your monthly mortgage payment, you can use the following formula:

Monthly Payment (M) is calculated as:

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

where:

  • § M § — monthly payment
  • § P § — principal loan amount (loan amount minus down payment)
  • § r § — monthly interest rate (annual interest rate divided by 12)
  • § n § — number of payments (loan term in months)

This formula allows you to determine how much you will need to pay each month to repay your mortgage over the specified term.

Example:

  • Loan Amount (§ P §): $200,000
  • Annual Interest Rate: 3.5%
  • Loan Term: 30 years
  • Down Payment: $40,000

First, calculate the principal:

§§ P = 200,000 - 40,000 = 160,000 §§

Next, convert the annual interest rate to a monthly rate:

§§ r = \frac{3.5}{100} \div 12 = 0.00291667 §§

Then, calculate the number of payments:

§§ n = 30 \times 12 = 360 §§

Now, plug these values into the formula:

§§ M = 160,000 \times \frac{0.00291667(1 + 0.00291667)^{360}}{(1 + 0.00291667)^{360} - 1} ≈ 718.43 §§

So, your monthly mortgage payment would be approximately $718.43.

When to use the Mortgage Calculator?

  1. Home Buying: Determine how much you can afford to borrow based on your financial situation.

    • Example: Assessing monthly payments for different loan amounts and interest rates.

  2. Refinancing: Evaluate potential savings by refinancing your existing mortgage.

    • Example: Comparing current mortgage payments with new terms.

  3. Budgeting: Plan your monthly budget by including mortgage payments.

    • Example: Understanding how mortgage payments fit into your overall financial plan.

  4. Investment Analysis: Analyze the feasibility of purchasing rental properties.

    • Example: Calculating expected monthly payments to determine cash flow.

  5. Financial Planning: Make informed decisions about homeownership and long-term financial commitments.

    • Example: Evaluating the impact of different down payment amounts on monthly payments.

Practical examples

  • First-Time Homebuyers: A first-time buyer can use this calculator to understand how different loan amounts and interest rates affect their monthly payments, helping them make informed decisions.
  • Real Estate Investors: Investors can analyze potential rental properties by calculating expected mortgage payments and comparing them to rental income.
  • Budgeting for Homeowners: Current homeowners can use the calculator to reassess their finances, especially if they are considering refinancing or making additional payments on their mortgage.

Use the calculator above to input different values and see how your monthly mortgage payment changes dynamically. The results will help you make informed decisions based on your financial situation and goals.