๐ Loan Calculator (Amortized)
Calculate monthly payments for any fixed-rate loan โ mortgage, auto, or personal.
๐ How Loan Amortization Works
With a standard amortized loan, you make the same payment every month, but the split between principal and interest changes over time. Early payments are mostly interest; later payments chip away at the principal faster.
๐ The Formula
Where:
- M = Monthly payment
- P = Loan principal (amount borrowed)
- r = Monthly interest rate (annual rate รท 12)
- n = Total number of payments (years ร 12)
๐ Example
A $300,000 mortgage at 6.5% for 30 years:
- Monthly rate = 6.5% รท 12 = 0.5417%
- Monthly payment โ $1,896
- Total paid over 30 years โ $682,633
- Total interest paid โ $382,633
โ๏ธ 15-Year vs 30-Year Mortgage
| 30-Year | 15-Year | |
|---|---|---|
| Monthly Payment | Lower | Higher (~1.5ร) |
| Total Interest | Much higher | Much lower |
| Equity Buildup | Slow | Fast |
| Best For | Cash flow flexibility | Minimizing interest cost |
โ FAQ
What's the 28/36 rule?
A common affordability guideline: spend no more than 28% of your gross monthly income on housing (PITI: principal, interest, taxes, insurance), and no more than 36% on total debt (housing + car loans + student loans + credit cards).
Does this calculator work for auto loans?
Yes. Enter the car price minus down payment as the loan amount, your APR, and the loan term (typically 3-7 years for auto loans).
Should I make extra payments?
Extra payments go directly toward principal, reducing total interest and shortening the loan term. One extra payment per year on a 30-year mortgage can knock ~4-5 years off the term.
Why does my actual payment differ from this calculator?
Real mortgage payments also include property taxes, homeowners insurance, and possibly PMI (private mortgage insurance). This calculator shows only principal + interest. Add ~20-30% for the full PITI payment.