Q:
What is the formula for calculating a mortgage payment?
A:
Quick Answer
The formula for calculating a monthly mortgage payment on a fixed-rate loan is: P = L[c(1 + c)^n]/[(1 + c)^n - 1]. The formula can be used to help potential home owners determine how much of a monthly payment towards a home they can afford.
Continue ReadingFull Answer
Before using the formula, it is important to understand what each variable means:
P= payment
L= loan amount
C= interest. To calculate the monthly interest, take the annual rate and divide it by 12. For example, if the annual rate is 3.5 percent, 0.035/12 = .003.
N= number of mortgage payments. If considering a 30-year mortgage, 12 payments a year times 30 years equals 360 total payments.
Learn more about Financial CalculationsSources:
Related Questions
-
Q:
How do you create a loan amortization sheet using home office software?
A: To create a loan amortization sheet using home software, such as Microsoft Excel, set up a loan data table in a new spreadsheet, calculate monthly payment ... Full Answer >Filed Under: -
Q:
What are the mathematics behind a mortgage loan calculator?
A: Mortgage calculators use loan amount, interest rate and number of monthly payments to compute the amount of a monthly mortgage payment, according to Intera... Full Answer >Filed Under: -
Q:
What is a P&I payment on a mortgage?
A: A "P&I" payment for a mortgage is a "principal and interest" payment, which is usually made monthly over the term of the loan, according to Quicken Loans. ... Full Answer >Filed Under: -
Q:
How do you calculate a commercial loan amortization schedule?
A: To calculate a commercial loan amortization schedule, draw a four-column table, and label them payment amount, interest paid, principal paid and remaining ... Full Answer >Filed Under:
