Use this loan payment calculator to determine the monthly payments for a loan based on the loan amount, interest rate and loan term.
How To Use Our Loan Calculator
A loan payment calculator can provide lots of useful information to those who know how to use it. At its most basic, the loan calculator determines the monthly mortgage payment from a loan amount, term and interest rate, which gives users an idea of a home's affordability. It allows consumers to play around with different home prices, loan terms and mortgage rates -- helping them find a price range they can comfortably afford.
Choosing a Mortgage Program
A home loan calculator can help borrowers choose the right mortgage plan for their needs. For example, suppose the King family has looked at several properties and is trying to decide between two of them -- one costs $250,000 and has many features they desire. The other isn't as nice, but its price is only $175,000. They have $50,000 to put down, so they'd be financing $125,000 or $200,000. After checking current mortgage rates, the Kings learn they can choose a 5/1 hybrid loan with a 2.75 percent rate, a 15-year mortgage with a 3.125 percent rate, or a 30-year fixed loan at 3.95 percent. These are the results generated by the loan calculator:
The Kings would like to keep their principal and interest under $900 per month. That means they can buy the cheaper home with any of the loan options shown, but if they want the more expensive property, they'll have to go with a 5/1 hybrid. This loan does carry some added risk, though, if they plan to keep the home for more than five years -- once the initial fixed rate period expires, their mortgage becomes adjustable. The interest rate could rise or fall, making budgeting a little more difficult.
Because the Kings plan to keep this new home until they retire in 25 years, they go with the cheaper house and the 30-year fixed mortgage.
In addition, the home loan calculator generates an amortization schedule. "Amortization" refers to the process by which a mortgage is repaid (literally, amortization means "killing" the mortgage balance). In the initial years of a mortgage, most of the monthly payment is allocated to paying the interest due, and relatively little is directed toward reducing the balance. Over the years, the balance drops, less interest accrues, and increasingly more of the payment goes toward principal repayment. Users can look at the schedule to see how the loan will be repaid over time, and how much principal balance remains after each payment.
Loan Payoff Calculator
Home buyers who'd like to retire their mortgages sooner (and pay less interest) can see how much extra they'd need to remit each month. The loan calculator functions as an early payoff calculator when users simply change the loan's term.
For example, here is the King's result if they buy the cheaper home and finance it with a 30-year fixed loan at 3.95 percent:
And here's the result if they choose a 20-year payment:
The results tell the Kings that they can be mortgage-free ten years sooner by paying an extra $161 per month. Instead of making 360 payments of $593.17 (totaling $213,541), they'd make 240 payments of $754.19 (totaling $181,006). Not only would they get rid of their mortgage sooner; the larger payment saves them $32,545!