Mortgage Payment Formulas

Have you ever wondered how your mortgage payments were calculated?  The mortgage payment formulas below will get you started on calculating your mortgage payments.

The following formula is used to calculate the fixed monthly payment (Y) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].
Y = L[c(1 + c)n]/[(1 + c)n – 1]

The next formula is used to calculate the remaining loan balance (B) of a fixed payment loan after p months.

B = L[(1 + c)n – (1 + c)p]/[(1 + c)n – 1]

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