Mortgage Rate Calculator
Estimate your potential monthly mortgage payments based on loan amount, interest rate, and loan term.
4.5%
Estimated Monthly Payment (Principal & Interest)
$0.00
Total Principal Paid: $0.00
Total Interest Paid: $0.00
Total Amount Paid: $0.00
Total Interest Paid: $0.00
Total Amount Paid: $0.00
Understanding Your Mortgage Rate and Payments
A mortgage is a significant financial commitment, and understanding how your monthly payments are calculated is crucial. This calculator helps you estimate your principal and interest (P&I) payment based on the loan amount, the annual interest rate, and the term of the loan (how many years you have to repay it).
The Mortgage Payment Formula
The standard formula used to calculate the monthly payment (M) for a mortgage is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- M = Your total monthly mortgage payment (principal and interest).
- P = The principal loan amount (the total amount you borrow).
- i = Your monthly interest rate. This is calculated by dividing your annual interest rate by 12. For example, if your annual rate is 4.5%, your monthly rate (i) is 0.045 / 12 = 0.00375.
- n = The total number of payments over the loan's lifetime. This is calculated by multiplying the loan term in years by 12. For a 30-year mortgage, n would be 30 * 12 = 360.
How the Calculator Works
Our calculator takes your inputs for the loan amount, annual interest rate, and loan term in years. It then applies the formula above:
- It converts the annual interest rate into a monthly interest rate (i).
- It converts the loan term in years into the total number of monthly payments (n).
- It plugs these values, along with your loan amount (P), into the formula to compute your estimated monthly payment (M).
- It also calculates the total principal paid, total interest paid over the life of the loan, and the total amount you will repay.
Factors Affecting Your Mortgage Rate
The "rate" in "mortgage rate calculator" is one of the most critical components influencing your monthly payment and the total cost of your home loan. Several factors determine the interest rate you'll be offered:
- Credit Score: A higher credit score generally leads to a lower interest rate.
- Loan-to-Value (LTV) Ratio: The ratio of the loan amount to the appraised value of the home. A lower LTV (meaning a larger down payment) usually results in a better rate.
- Loan Term: Shorter loan terms (e.g., 15 years) typically have lower interest rates than longer terms (e.g., 30 years).
- Market Conditions: Prevailing economic conditions and Federal Reserve policies influence overall interest rate levels.
- Loan Type: Fixed-rate mortgages have different rates than adjustable-rate mortgages (ARMs).
- Points: Borrowers may choose to "buy down" their interest rate by paying "points" upfront at closing.
Why Use a Mortgage Rate Calculator?
This calculator is a valuable tool for:
- Budgeting: Understand how much house you can afford.
- Comparing Offers: See how different interest rates and loan terms from various lenders might affect your payments.
- Financial Planning: Estimate the total cost of homeownership over time.
- Refinancing Decisions: Evaluate if refinancing your existing mortgage to a lower rate would be beneficial.
Remember, this calculator provides an estimate for principal and interest only. Your actual monthly mortgage payment will likely include property taxes, homeowner's insurance, and potentially Private Mortgage Insurance (PMI) or HOA dues, often referred to as PITI (Principal, Interest, Taxes, Insurance).