The following formula is used to calculate the fixed monthly payment, P, required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c.  NOTE: If the quoted rate for the loan is 6%, c is calculated as 0.06/12 or .005

For more information about how this works, check out the Mortgage Professor's website.

P = L[c(1 + c)ⁿ] / [(1 + c)ⁿ - 1]

LEGEND:

P = Your fixed monthly payment.
L = The total loan amount in dollars.
c = The interest rate.  NOTE: If the quoted interest rate is 6%, c is calculated as (0.06 / 12) ==> 0.005
n = The term (number of months) for the loan.

Let's say your loan amount is $121,200 (L = 121,200), your interest rate is: 2.875% (c = 0.02875/12), and the term of your loan is 180 months or 15 years (n = 180), then your fixed monthly payment, P, will be: $829.72

To run this example scenario, press the Run Example Scenario button below.

To run your own mortgage scenario, enter the appropriate values in the form fields below and then press the Calculate Your Monthly Payment button.