How your monthly payment is calculated
The monthly mortgage payment for a fixed-rate loan uses the standard amortization formula: M = P · r / (1 − (1 + r)⁻ⁿ), where P is the principal, r is the monthly rate and n is the number of payments.
A larger down payment reduces the principal and therefore total interest. Shortening the term increases the monthly cost but saves significantly in long-term interest.
Frequently asked questions
How much down payment do I need? 20% is standard to avoid PMI, but many programs allow 3% to 5%.
Fixed or adjustable rate? Fixed offers stability; ARM can save money if rates fall.