Money Guy Show Mortgage Calculator
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Reviewed by Calculator Editorial Team
This mortgage calculator helps you estimate your monthly payments, total interest, and amortization schedule based on loan amount, interest rate, and term. Whether you're a first-time homebuyer or refinancing, this tool provides quick insights to help you make informed decisions.
How to Use This Calculator
Using our mortgage calculator is simple:
- Enter the loan amount you're applying for.
- Input the annual interest rate (APR).
- Select the loan term in years.
- Click "Calculate" to see your monthly payment and other details.
- Review the results and adjust your inputs as needed.
The calculator uses standard amortization formulas to provide accurate estimates. Keep in mind that these are estimates and your actual mortgage terms may vary based on your lender's specific conditions.
Formula Used
The monthly mortgage payment is calculated using the standard amortization formula:
Mortgage Payment Formula
M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1 ]
Where:
- M = Monthly payment
- P = Principal loan amount
- i = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (loan term in years multiplied by 12)
This formula accounts for the interest on both the original principal and the interest accumulated on previous payments.
Worked Example
Let's calculate a mortgage payment for a $200,000 loan at 4.5% annual interest for 30 years:
- Convert annual rate to monthly: 4.5% ÷ 12 = 0.375% or 0.00375
- Calculate number of payments: 30 years × 12 = 360 payments
- Plug values into formula:
M = $200,000 [ 0.00375(1 + 0.00375)^360 ] / [ (1 + 0.00375)^360 - 1 ]
- The calculation yields approximately $1,073.64 per month
Over 30 years, you would pay about $386,470 in total, with $186,470 going toward interest.
Frequently Asked Questions
What is the difference between APR and interest rate?
APR (Annual Percentage Rate) is the total cost of credit including fees, while the interest rate is the actual percentage charged on the loan amount. APR is typically higher than the interest rate.
How does loan term affect my payment?
A shorter loan term means higher monthly payments but lower total interest paid. A longer term results in lower monthly payments but higher total interest. Choose based on your financial situation and goals.
What are closing costs?
Closing costs are fees charged by lenders and other parties at the time of closing. These typically include appraisal fees, title insurance, origination fees, and points. They usually amount to 2-5% of the loan amount.