Use our Bankrate Mortgage Calculator to quickly estimate your monthly principal and interest payment. Understanding this cost is the first step toward smart homeownership.
Bankrate Mortgage Calculator
Total Interest Paid:
Detailed Calculation Breakdown
Input Variables:
Calculation Steps:
Final Result Summary:
Bankrate Mortgage Calculator Formula
Formula Source: Investopedia: Amortization Formula | Bankrate Mortgage Payment Guide
Variables Explained
The standard amortization formula uses three main variables to determine the monthly payment (M):
- P (Principal Loan Amount): The initial amount borrowed.
- R (Annual Interest Rate): The yearly percentage rate charged by the lender.
- T (Loan Term in Years): The duration over which the loan will be repaid.
- i (Monthly Interest Rate): Calculated as $R / 12 / 100$.
- n (Total Number of Payments): Calculated as $T \times 12$.
Related Calculators
Explore these related financial tools for comprehensive planning:
- Mortgage Refinance Savings Calculator
- Home Affordability Calculator
- Debt-to-Income (DTI) Ratio Estimator
- Bi-Weekly Mortgage Payment Calculator
What is the Bankrate Mortgage Calculator?
The Bankrate Mortgage Calculator is a tool designed to help prospective and current homeowners estimate their monthly mortgage payments. This estimate typically includes the principal and interest (P&I) portion of the payment, which is based on the loan amount, the annual interest rate, and the term of the loan. It uses the standard fixed-rate amortization formula, a globally accepted method for determining loan repayments.
Understanding your P&I payment is crucial because it directly impacts your budget and helps you determine how much home you can realistically afford. While this calculator doesn’t factor in property taxes, homeowner’s insurance (together known as PITI), or private mortgage insurance (PMI), it provides the foundational financial cost required by the lender.
How to Calculate Monthly Payments (Example)
- Determine Variables: Assume a Loan Amount (P) of $250,000, an Annual Interest Rate (R) of 6.0%, and a Term (T) of 30 years.
- Calculate Monthly Rate (i): Convert the annual rate to a monthly decimal: $i = (6.0 / 100) / 12 = 0.005$.
- Calculate Total Payments (n): Convert the term to months: $n = 30 \times 12 = 360$ payments.
- Apply the Amortization Formula: Substitute these values into the formula to find the Monthly Payment (M).
- Result: In this example, the resulting monthly P&I payment would be approximately $1,498.88.
Frequently Asked Questions (FAQ)
A: No, this calculator only estimates the Principal and Interest (P&I) payment. PITI (Principal, Interest, Taxes, Insurance) requires additional inputs for property taxes and homeowner’s insurance, which vary significantly by location.
Q: What is the benefit of a shorter loan term?A: A shorter loan term (e.g., 15 years vs. 30 years) results in a higher monthly payment but significantly reduces the total interest paid over the life of the loan. You build equity faster and save tens of thousands of dollars.
Q: Can I use this for an adjustable-rate mortgage (ARM)?A: This calculator provides an accurate payment calculation based on the *current* fixed rate. It cannot predict future rate changes for an ARM, so it is only suitable for the initial period of an ARM or for fixed-rate loans.
Q: How do property taxes and insurance affect the payment?A: Lenders often require taxes and insurance to be paid into an escrow account monthly. This escrow amount is added to the P&I payment, increasing the total monthly outflow significantly. Always factor these into your final affordability assessment.