Frequently Asked Questions
How is a monthly loan payment calculated?
Monthly payment is calculated using the PMT formula: P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of months.
What is the monthly payment on a $200,000 loan at 4% for 30 years?
A $200,000 loan at 4% annual interest over 30 years results in a monthly payment of approximately $954.83, with total interest paid of around $143,739 over the life of the loan.
How does the interest rate affect monthly payments?
A higher interest rate increases both the monthly payment and the total interest paid. For example, on a $200,000 30-year loan, a rate increase from 4% to 6% raises the monthly payment from ~$955 to ~$1,199.
What is amortization?
Amortization is the process of paying off a loan through regular equal payments. Early payments are mostly interest; later payments are mostly principal. Each payment reduces the outstanding balance until the loan is fully paid.
Does this calculator include taxes and insurance?
No. This calculator shows the principal and interest (P&I) payment only. For mortgages, your actual monthly payment may also include property taxes, homeowner's insurance, and PMI.