# How to calculate monthly payment on a loan

## What is the formula to calculate monthly payments on a loan?

If you want to do the monthly mortgage payment calculation by hand, you’ll need the monthly interest rate — just

**divide the annual interest rate by 12 (the number of months in a year)**. For example, if the annual interest rate is 4%, the monthly interest rate would be 0.33% (0.04/12 = 0.0033).## How do you calculate payments on a loan?

**Here’s how you would calculate loan interest payments.**

- Divide the interest rate you’re being charged by the number of payments you’ll make each year, usually 12 months.
- Multiply that figure by the initial balance of your loan, which should start at the full amount you borrowed.

## How do you calculate monthly payments with interest?

**Divide your interest rate by the number of payments you’ll make in the year**(interest rates are expressed annually). So, for example, if you’re making monthly payments, divide by 12. 2. Multiply it by the balance of your loan, which for the first payment, will be your whole principal amount.

## How do you calculate monthly payments manually?

## How do I calculate a monthly payment in Excel?

**=PMT(17%/12,2*12,5400)**

The rate argument is the interest rate per period for the loan. For example, in this formula the 17% annual interest rate is divided by 12, the number of months in a year. The NPER argument of 2*12 is the total number of payment periods for the loan.

## How is Piti calculated?

Monthly housing payment (PITI)

Maximum monthly payment (PITI) is calculated by taking the lower of these two calculations: **Monthly Income X 28% = monthly PITI**. Monthly Income X 36% – Other loan payments = monthly PITI.