Enter a price, down payment, rate and term to get the loan amount, loan-to-value ratio, monthly principal and interest, and what the discount points cost. Everything updates as you type.
= $80,000.00
Annual rate.
1 point = 1% of the loan.
Results
Monthly principal & interest
Not including taxes, insurance or mortgage insurance
$2,022.62
Loan amount
$400,000.00 − $80,000.00 down
$320,000.00
Loan-to-value (LTV)
80%
Cost of points
1 point × $320,000.00
$3,200.00
First payment: interest
$1,733.33
First payment: principal
$289.29
Total interest over the loan
360 payments
$408,142.36
Worked steps
Exam questions rarely make you use the full payment formula by hand. They test the pieces: the loan amount, LTV, points, one month's interest, and payments built from a payment factor. Learn these and you can answer almost any loan question.
Example
A buyer pays $400,000 with 20% down. The loan is 30 years at 6.5% with 1 discount point. Find the loan, LTV, points cost and the interest in the first payment.
Payment factors.Some questions give a factor such as "$6.32 per $1,000 borrowed." Divide the loan by 1,000 and multiply: $320,000 ÷ 1,000 × $6.32 = $2,022.40. Factor tables are rounded, so the answer is a little off from the exact formula.
Points and the price. Points are charged on the loan, so a bigger down payment means cheaper points. A classic trap is multiplying the points by the purchase price.
Mortgage insurance and LTV.Under the federal Homeowners Protection Act, you can ask the servicer to cancel private mortgage insurance once the balance is scheduled to reach 80% of the home's original value, and it must end automatically when the balance is scheduled to reach 78% (if you're current on payments).
Divide the loan amount by the property's value or price, whichever the question gives. A $320,000 loan on a $400,000 home is $320,000 ÷ $400,000 = 80% LTV. A 20% down payment always means an 80% LTV.
One point is 1% of the loan amount, not the purchase price. On a $320,000 loan, one point costs $3,200 and 1.5 points cost $4,800.
Multiply the loan balance by the annual rate and divide by 12. A $320,000 loan at 6.5% has $320,000 × 0.065 ÷ 12 = $1,733.33 of interest in the first payment. The rest of the payment goes to principal.
This calculator shows principal and interest (P&I), which is what the payment formula and payment-factor tables give you. A full house payment, often called PITI, also adds property taxes, homeowners insurance and any mortgage insurance, which vary by property.
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