Loan Calculators

The amortization loan calculator is used to determine the periodic payment amount of a loan (typically a mortgage), based on the amortization process.

The amortization repayment model factors varying amounts of both, interest and principal, into every installment, eventhough the total amount of each payment is the same.

The amortization loan calculator can also reveal the exact dollar amount that goes toward interest as well as the exact dollar amount that goes towards principal out of each individual payment. Furthermore, the amortization schedule is a table delineating these figures across the duration of the loan in chronological order.

If you already know what your maximum payment amount is (usually based on your income, among other considerations), you can run the amortization calculation backwards to determine how much principal you can afford to borrow.

It is recommended to run this loan calculator using the same maximum monthly payment and different interest rates before meeting with a mortgage broker. This way, you know ahead of time how much principal you can afford as soon as possible.

However, remember that this basic amortization loan calculator takes into account only the costs involved repaying the interest and principal of a loan. Other costs involved with home ownership may lower the amount of money you have available to cover periodic payments. These may include property tax, homeowner's insurance, and condominium association fees, among others.

Other Calculations

While typically used for mortgage-related purposes, you can also use the amortization loan calculator to analyze debts, including short-term loans and credit cards.

Example: Calculate the monthly payment amount necessary to pay off a credit card in one year period, where P=current balance, i=card's interest rate, and n=12 (12 payments).

The Loan Calculator Formula

The calculation used to arrive at the periodic payment amount assumes that the first payment is not due on the first day of the loan, but rather one full payment period into the loan.
While usually used to solve for A, the loan calculator formula can be used to solve for any single variable in the equation, assuming that all other variables are known.
The formula is:

A

=

P

i(1+i)n (1+i)n-1

Where:
A = periodic payment amount
P = amount of principal
i = periodic interest rate
n = total number of payments (for a 30-year loan with monthly payments, n = 30 years x 12 months = 360)