Loan Calculator


A loan calculator is an automated tool that helps borrowers determine their monthly payments on a loan.

What is a loan calculator?

A loan calculator takes your inputted data and puts it into a complicated formula. This tool then computes your monthly payment, based on the principal, or loan amount, the interest rate, and the loan term, or how long the loan will be. The most common loan calculators are mortgage calculators, auto loan calculators, and personal loan calculators.

You can manipulate these fields of data to see what the costs would be for different scenarios. The goal of the loan calculator is to help you find the right combination of a loan balance, an interest rate, and a loan tenure to give you an affordable monthly payment that is best for your current situation.

What are the different parts of a mortgage loan calculator?

A mortgage calculator is a useful tool to get an estimation of a monthly mortgage payment. There are a few different types of options that you can test to see what you can afford.

Home Purchase Price

This is the total purchase or selling price of the home you are purchasing. This number includes the down payment and the loan balance.

Down Payment

The down payment is the amount of money you are putting down in cash. Most lenders would like to see at least 20%.

Loan Term

A loan term is how long you will take to pay back the debt. Most mortgages have the standard option for 30-year fixed or 15-year fixed loans. However, there are different kinds of mortgages available. In general, the longer the loan term, the lower your monthly payment but, the more interest you will end up paying overall.

Interest Rate

The interest rate is the percentage that the lender charges you to take out the loan. Unfortunately, you can’t choose your interest rate. It is usually a combination of your credit rating and the market interest rate in your area. Most loan calculators will default to the market interest rate.

Other Features

Loan Amortization Schedule

Some mortgage calculators will show you an amortization chart. This is a detailed breakdown of how each of your monthly payments is divided up between the interest payment and principal. What’s most interesting is seeing the total interest you will pay by the end of the loan.

Private Mortgage Insurance

Some mortgage calculators will input an estimated monthly amount of private mortgage insurance or PMI. Lenders require PMI if your downpayment is less than 20% of the home’s purchase price. With the PMI option, if you input 20% of the loan as your downpayment, you can see the monthly payment decrease because PMI is no longer required.

Taxes and Insurance

Some mortgage calculators also estimate the property tax and homeowners insurance. The actual expense will vary depending on the geographic location of your home.

HOA Dues

Some mortgage calculators will also have the option to input HOA dues. This option usually defaults to $0. However, if you know that the community of your potential home has a monthly HOA fee, input this data into the calculator. You will be able to see the real cost of owning this home and evaluate its affordability.