Mortgage Loan Calculators

Calculating Your Mortgage Payment

Calculating a mortgage payment can seem daunting, but with a few simple steps, you can determine what your monthly payment will be.

Purchase Price: This is the total price of purchasing the property.
Downpayment: This is a portion of the total purchase price of a home that a borrower pays upfront in cash.
Term: This is the length of time you have to pay off your loan. Typically, mortgage terms are 15 or 30 years.
Interest Rate: This is the annual interest rate that will be applied to your loan.
Property Tax: Use the estimate provided or use the Lafayette Parish Tax Estimator to get a more accurate estimate.
PMI: Private mortgage insurance, or PMI, is a type of insurance typically required by the mortgage lender when the borrower’s down payment on a home is less than 20% of the total cost of the home. Private mortgage insurance rates are typically 0.5% to 1.0% of the value of the mortgage.
Property Insurance: Property insurance, also known as homeowner's insurance, is a type of insurance that protects the homeowner in case of damage or loss to their property or possessions. The cost of property insurance is determined by several factors, including home value, location, age and condition of home, your deductible, and type of coverage.

By following these simple steps, you can calculate your mortgage payment and better understand your financial obligations as a homeowner.

Understanding the Formula

The formula for calculating a mortgage payment is based on the principal amount, interest rate, and loan term. It uses a mathematical equation known as the amortization formula to determine the amount of each payment that goes towards paying off the principal balance and the interest.

The formula is as follows:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

Where:

M = monthly mortgage payment
P = the principal amount of the loan
i = the monthly interest rate, which is the annual interest rate divided by 12
n = the number of monthly payments, which is the loan term in years multiplied by 12 (months in a year)

To use the formula, you would plug in the values for P, i, and n and then solve for M. Alternatively, you can use an online mortgage payment calculator that will do the calculation for you.

It's important to note that the mortgage payment calculated by this formula will only include the principal and interest portions of your payment, and you will need to factor in additional costs such as property taxes and insurance to determine your total monthly payment.