1. What is P&I Mortgage Payment?

The P&I (Principal and Interest) mortgage payment is the core component of a mortgage payment that goes toward repaying the loan principal and paying the interest charges. It does not include taxes, insurance, or other escrow items.

2. How Does the Calculator Work?

The calculator uses the standard mortgage payment formula:

Where:

• \( Loan \) — Original loan amount ($)
• \( Rate \) — Monthly interest rate (decimal)
• \( Periods \) — Total number of monthly payments

Explanation: This formula calculates the fixed monthly payment required to fully amortize a loan over its term, accounting for both principal and interest components.

3. Importance of P&I Calculation

Details: Accurate P&I calculation is essential for budgeting, comparing loan offers, understanding the true cost of borrowing, and making informed decisions about mortgage financing.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 4.5 for 4.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between P&I and total monthly payment?
A: P&I covers only principal and interest. Total payment includes P&I plus property taxes, insurance, and possibly PMI or HOA fees.

Q2: How does loan term affect the payment?
A: Longer terms result in lower monthly payments but higher total interest paid over the life of the loan.

Q3: Are mortgage rates compounded monthly?
A: Yes, mortgage interest is typically compounded monthly, which is reflected in this calculation.

Q4: What if I make extra payments?
A: Extra payments reduce the principal balance faster, potentially shortening the loan term and reducing total interest paid.

Q5: Does this work for adjustable-rate mortgages?
A: This calculator provides the initial fixed payment for ARMs. Future payments will change when the rate adjusts.