How we calculate

The level payment formula

For a fixed-rate loan repaid in equal instalments:

M = P × r ÷ (1 − (1 + r)⁻ⁿ)

P is the amount borrowed, r the periodic rate, n the number of payments. For a monthly loan, r is the annual rate divided by twelve. At a zero rate the payment is simply P divided by n.

Worked example: $350,000 at 6.5% over 30 years gives a payment of $2,212.24 and total interest of $446,405.71. Those are the figures this engine is tested against.

Building the schedule

Each period we charge interest on the outstanding balance, then apply the remainder of the payment to principal:

• Interest = balance × r
• Principal = payment − interest
• New balance = balance − principal

Extra payments go entirely to principal in the period they are made. The final payment is reduced so the balance lands exactly on zero rather than overshooting. If a payment would not cover the interest charged, we stop and say so instead of showing a balance that grows forever.

Biweekly schedules

A biweekly loan is modelled as 26 periods a year, with a periodic rate of the annual rate divided by 26 and a payment of half the monthly amount. This matches how most servicers run these plans. It approximates a true daily-accrual loan; over a full term the difference is normally a few dollars.

What we deliberately do not model

• Day-count conventions. Notes vary between 30/360, actual/365 and actual/360. We use a simple periodic rate, which matches most consumer loans closely but not exactly.
• Payment timing. We assume payments arrive on schedule. On a loan that accrues daily, paying early or late changes the interest.
• Rate changes. Every calculator assumes a fixed rate. Adjustable loans cannot be projected honestly because the future rate is unknown.
• Escrow adjustments. Tax and insurance are held constant. In reality they are reassessed, and usually rise.

Why your lender's figure differs

A few dollars a month comes from rounding and day counts. A large gap almost always means something is in their number that is not in yours: a financed origination fee, mortgage insurance, an escrow shortage being made up over twelve months, or a different rate than the one you were quoted. Ask for a breakdown rather than assuming either figure is wrong.

What this site is not

These are estimating tools. They are not financial, tax or legal advice, they do not constitute an offer of credit, and no figure here is a quote. We do not lend money, arrange loans, or pass your details to anyone - there is nothing to pass on, because every calculation runs in your browser and nothing you type leaves the page.