Advanced Mortgage Repayment Calculator
Your Estimated Payment Breakdown
Understanding Mortgage Repayment Calculations
Purchasing a home is one of the most significant financial decisions you'll ever make. Using an accurate mortgage repayment calculator helps you understand how different interest rates, loan terms, and down payments impact your monthly budget and long-term financial health.
The Math Behind the Mortgage
The standard formula used to calculate a fixed-rate mortgage payment is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- M: Your total monthly payment.
- P: The principal loan amount (Home Price minus Down Payment).
- i: Your monthly interest rate (Annual rate divided by 12 months).
- n: The total number of months in your loan term (Years multiplied by 12).
Example Calculation
If you purchase a home for $400,000 with a 20% down payment ($80,000), your principal loan amount is $320,000. At a 6% interest rate for a 30-year term:
- Your monthly principal and interest payment would be approximately $1,918.56.
- Over 30 years, you will pay $370,682 in interest.
- The total cost of the loan (Principal + Interest) would be $690,682.
Key Factors That Influence Your Payment
1. Down Payment: A larger down payment reduces your principal balance, which lowers your monthly payments and the total interest paid. If your down payment is less than 20%, you may also need to budget for Private Mortgage Insurance (PMI).
2. Interest Rate: Even a 0.5% difference in interest rates can save or cost you tens of thousands of dollars over the life of the loan. Your credit score is the primary driver of the interest rate lenders offer you.
3. Loan Term: 15-year mortgages typically have lower interest rates and result in much less interest paid overall, but they require higher monthly payments compared to standard 30-year mortgages.