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# Mortgage Calculator

Updated on April 18, 2024
Article byHarsh Katara
Edited byHarsh Katara
Reviewed byDheeraj Vaidya, CFA, FRM

## Mortgage Payment Calculator

The mortgage payment loan calculator loan shall allow you to calculate the monthly installment amount that is required to be paid on loan, which is taken wherein interest is paid periodically, reducing the principal amount.

#### Mortgage Formula

[P x R x (1+R)^N]/[(1+R)^N-1]

Wherein,
• P / pv is the loan amount
• R / rate is the rate of interest per annum
• N / nper is the number of period or frequency wherein loan amount is to be paid
• PMT is the EMI amount
\$
%

### About the Mortgage Payment Calculator

To use this simple mortgage payment loan calculator, one needs to know the principal amount, the loan period, and the interest rate.

PMI stands for private mortgage insurance, which is only required when the loan amount is greater than 80% and is usually provided at a fixed basis point, and it may get canceled when the equity amount crosses 20%. One can also include property taxes, insurance, and PMI if payable. We need to divide these payments by loan period and add them to the monthly installment.

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### How to Calculate the Monthly Installments?

One needs to follow the below steps to use this simple mortgage payment loan calculator to calculate the monthly installment amounts.

1. First of all, determine the loan amount required. Banks usually provide more loan amounts to those with a good credit score and fewer to those with a lower credit score. First, we shall enter the principal amount:

2. Multiply the principal by the rate of interest.

3. We need to compound the same by rate until the loan period.

4. We now need to discount the above result obtained in step 3 by the following:

5. After entering the above formula in excel, we shall obtain installments periodically.

One can also obtain periodical installments by entering below basic excel formulas:

PMT(rate, nper, pv, fv, (type))

### Mortgage Calculator Examples

You can download this Mortgage Calculator Excel Template here – Mortgage Calculator Excel Template

#### Example #1

Harry dreamed of purchasing a house in the metro city wherein he was working and currently staying on rent. He has maintained a good credit score as he was paying all the dues on the credit card within due dates, and that is also the total amount due and not the minimum amount due. The flat that proposes to buy costs around \$140,800.

Therefore, when he applied for a housing loan, he was approved for 80% of the property value. He already had more than 20% equity and decided to take a loan for the approved amount. The rate of interest applicable to this loan was 8.5% fixed. He wants the loan tenure to be 20 years and installments to be paid monthly. Based on the above information, you must calculate the EMI amount equally in monthly installments.

The EMI amounts will begin at the end of the period.

Solution:

• We need to calculate the EMI amount for that first, and we shall calculate the loan amount, which is 140,800 * 80%, 112,640.
• The number of periods it is required to be paid is 20 years. Still, since Harry will pay monthly, the number of payments he shall be required to be paid is 20*12, which is 240 equal installments. Lastly, the interest rate is 8.5% fixed, which shall be calculated monthly, which is 8.5%/12, which is 0.71%.

Now we shall use the below formula to calculate the EMI amount.

EMI =[P x R x (1+R)^N]/[(1+R)^N-1]

Therefore, the EMI amount for Mr. Harry for 20 years on the loan amount of 112,640 shall be 977.52

#### Example #2

Mr. J proposes to purchase a vehicle on a monthly installment basis. The loan period is ten years, and the interest rate is 11%. The loan amount approved was 100% for the purchase of a vehicle which was \$25,000.

The loan has to be repaid monthly. Furthermore, Mr. J is also required to pay an insurance amount of \$2,500, which can be clubbed with the EMI amount. Based on the above information, you are required to calculate the total monthly outgo amount and the excess amount paid as interest.

Solution:

We need to calculate the EMI amount; for that, first, we shall calculate the loan amount, which is 25,000 * 100%, which is 25,000. The number of periods it is required to be paid is ten years, but since Mr. J is going to pay monthly, the number of payments that he shall be required to be paid is 10*12, which is 120 equal installments. Lastly, the interest rate is 11.00% fixed, which shall be calculated monthly at 8.5%/12, which is 0.71%.

Now we shall use the below formula to calculate the EMI amount.

EMI =[P x R x (1+R)^N]/[(1+R)^N-1]
• The monthly outgo for the insurance amount will be \$2,500/120, which is \$20.83.
• Therefore, the EMI amount for Mr. J for ten years on the loan amount of \$25,000 shall be \$20.83.
• Total interest outgo equals to (\$344.38 * 120) – \$25,000 which is \$16,325

### Conclusion

This is a very simple mortgage payment loan calculator wherein we have incorporated a fixed interest rate. However, there are loans in the market that shall also offer a floating rate of interest wherein the calculation for the remaining period changes from the date of interest. Usually, loans with fixed-rate have comparatively higher than floating rates as the Banks are locking in the interest rate for longer. Accordingly, the interest and EMI amount shall either increase or decrease.

### Recommended Articles

This has been a guide to the Guide to Mortgage Calculator. Here we provide the mortgage payment calculator to calculate your monthly installment amounts or loans with examples. Learn more from the following articles –