Mortgage Calculator
Calculate your monthly mortgage payments, total interest, and amortization schedule. Free mortgage calculator with taxes, insurance, and PMI options.
Mortgage Calculator
Understanding Mortgages: Theory, Usage, and History
What is a Mortgage?
A mortgage is a loan used to purchase real estate, where the property serves as collateral. The borrower makes monthly payments that include principal (loan amount) and interest, and may also include taxes, insurance, and PMI through an escrow account.
Monthly Payment Formula:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
- M: Monthly payment
- P: Principal loan amount
- r: Monthly interest rate
- n: Total number of payments
History of Mortgages
The modern mortgage system developed during the Great Depression with the creation of the Federal Housing Administration (FHA) in 1934. Before this, home loans typically required 50% down payments and were due in full after 5-10 years. The FHA introduced the 30-year fixed-rate mortgage with lower down payments, making homeownership accessible to millions of Americans.
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Quick Tips
- • Shop around for the best interest rates
- • Consider the total cost, not just monthly payments
- • Factor in all costs: taxes, insurance, maintenance
- • A larger down payment reduces PMI and interest