Mortgage Loan Calculator – Easy & Accurate Home Loan Estimates

Just enter the loan amount or amount you want to borrow.
Enter interest rate (ex. 4.5 for 4.5%)
Enter the loan term this is how long you want to pay the loan back in years
You can toggle the payment frequency from months to bi-weekly as needed.
Click the Calculate payment button.
Your payment will be listed below.
Optionally, if you want an amortization schedule, click the Show Amortization Schedule button.

To calculate a loan, you need to understand a few key components:

Loan Amount (Principal): The amount of money you borrow.
Interest Rate: The percentage charged on the loan amount.
Loan Term: The period over which you will repay the loan.
Repayment Schedule: How often payments are made (e.g., monthly, quarterly).

Here’s a step-by-step guide to calculating loan payments:

1. Fixed-Rate Loan Payment Calculation

For fixed-rate loans, you can use the following formula to calculate the monthly payment:

M=P×r×(1+r)n(1+r)n−1M = frac{P times r times (1 + r)^n}{(1 + r)^n - 1}M=(1+r)n−1P×r×(1+r)n

Where:

MMM = Monthly payment
PPP = Loan amount (Principal)
rrr = Monthly interest rate (annual interest rate divided by 12)
nnn = Total number of payments (loan term in years multiplied by 12)

Example:

Suppose you borrow $10,000 at an annual interest rate of 5% for 5 years.

Loan amount (PPP): $10,000
Annual interest rate: 5%
Monthly interest rate (rrr): 0.05 / 12 = 0.004167
Loan term: 5 years
Total number of payments (nnn): 5 times 12 = 60

Plug these values into the formula:

M=10000×0.004167×(1+0.004167)60(1+0.004167)60−1M = frac{10000 times 0.004167 times (1 + 0.004167)^{60}}{(1 + 0.004167)^{60} - 1}M=(1+0.004167)60−110000×0.004167×(1+0.004167)60

2. Interest Calculation

To calculate the total interest paid over the life of the loan:

Total Interest=(M×n)−Ptext{Total Interest} = (M times n) - PTotal Interest=(M×n)−P

Using the monthly payment (MMM) calculated earlier, multiply by the total number of payments (nnn), then subtract the principal (PPP).

3. Amortization Schedule

An amortization schedule shows the breakdown of each payment into interest and principal components. Here's the general approach:

Calculate the interest for the period: Interest for Period=Outstanding Principal×rtext{Interest for Period} = text{Outstanding Principal} times rInterest for Period=Outstanding Principal×r
Calculate the principal repayment: Principal Repayment=M−Interest for Periodtext{Principal Repayment} = M - text{Interest for Period}Principal Repayment=M−Interest for Period
Update the outstanding principal: New Principal=Outstanding Principal−Principal Repaymenttext{New Principal} = text{Outstanding Principal} - text{Principal Repayment}New Principal=Outstanding Principal−Principal Repayment

Repeat these steps for each period.

4. Example Calculation

Using the given example values:

Calculate monthly payment (MMM): M=10000×0.004167×(1+0.004167)60(1+0.004167)60−1=$188.71M = frac{10000 times 0.004167 times (1 + 0.004167)^{60}}{(1 + 0.004167)^{60} - 1} = $188.71M=(1+0.004167)60−110000×0.004167×(1+0.004167)60=$188.71
Calculate total interest paid: Total Interest=(188.71×60)−10000=1322.60text{Total Interest} = (188.71 times 60) - 10000 = 1322.60Total Interest=(188.71×60)−10000=1322.60