A Mortgage Loan Calculator is a financial tool that helps borrowers estimate their monthly mortgage payments. By inputting the loan amount, interest rate, and loan term, you can calculate your monthly payment and see a breakdown of principal and interest.
Formula for Mortgage Loan Calculation
The formula for calculating the monthly mortgage payment is:
\[M = P \times \frac{r}{1 - (1 + r)^{-n}}\]
Where:
M = Monthly Payment
P = Principal Loan Amount
r = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Monthly Payments (Loan Term in Years × 12)
Calculation Steps
Calculate the monthly interest rate by dividing the annual rate by 12.
Determine the total number of monthly payments by multiplying the loan term in years by 12.
Apply the formula to calculate the monthly payment.
Calculate the total payment by multiplying the monthly payment by the total number of payments.
Calculate the total interest paid by subtracting the original loan amount from the total payment.
Example
Let's consider a scenario with the following details:
Loan Amount: $200,000
Interest Rate: 4% per year
Loan Term: 30 years
Calculation:
Monthly interest rate: 4% / 12 = 0.3333%
Number of monthly payments: 30 × 12 = 360
Monthly payment: $954.83
Total payment: $343,739.52
Total interest paid: $143,739.52
Green: Principal ($200,000) | Red: Total Interest ($143,739.52)
In this example, the borrower would have a monthly payment of $954.83. The total payment over 30 years would be $343,739.52, with $143,739.52 paid in interest.
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