1. What is a Mortgage Amortization Calculator?

A mortgage amortization calculator helps you understand how your monthly mortgage payments are structured over the life of your loan, showing how much goes toward principal versus interest each month.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

• \( Principal \) — Original loan amount ($)
• \( Rate \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (term in years × 12)

Explanation: This formula calculates the fixed monthly payment required to fully amortize (pay off) the loan over its term.

3. Understanding Your Mortgage Payment

Details: Each payment consists of both principal and interest. Early in the loan, most of your payment goes toward interest. Over time, more goes toward reducing the principal.

4. Using the Calculator

Tips: Enter the loan amount, annual interest rate (as a percentage), and loan term in years. The calculator will show your estimated monthly payment and total loan cost.

5. Frequently Asked Questions (FAQ)

Q1: What's included in a typical mortgage payment?
A: This calculator shows principal and interest only. Actual payments may include property taxes, insurance, and PMI if applicable.

Q2: How does a longer loan term affect my payment?
A: Longer terms reduce monthly payments but increase total interest paid over the life of the loan.

Q3: How can I pay less interest overall?
A: Make extra principal payments when possible, choose a shorter loan term, or secure a lower interest rate.

Q4: What's the difference between APR and interest rate?
A: The interest rate is the cost to borrow the principal. APR includes additional fees and costs.

Q5: How often are mortgage payments compounded?
A: Most mortgages use monthly compounding, meaning interest is calculated monthly on the current balance.