How to use the loan payment sensitivity table
- Enter the loan amount.
- Enter a center yearly rate and a rate step. The table shows three rates below and three above the center.
- List the terms in years, separated by commas. You can compare up to six.
- Choose to show the monthly payment, the total interest or the total paid.
Formula
monthly payment = P x i / (1 - (1 + i)^-n)
total paid = monthly payment x n
total interest = total paid - P
P is the loan amount, i is the yearly rate divided by 12 and n is the number of monthly payments, which is the term in years times 12. At a rate of 0 the payment is P divided by n.
A $300,000 loan over 15, 20 and 30 years
With a center rate of 6.5 percent and a step of 0.5, the table covers 5 to 8 percent. At 6.5 percent the monthly payment is $2,613.32 over 15 years, $2,236.72 over 20 years and $1,896.20 over 30 years. At 5 percent the 15 year payment is $2,372.38, and at 8 percent it is $2,866.96, a spread of $494.58.
Switching the table to total interest, the same 6.5 percent loan costs $170,397.98 in interest over 15 years, $236,812.66 over 20 years and $382,633.47 over 30 years. Longer terms lower the payment but add much more interest.
What the grid shows
Reading across a row shows what a longer term does at one rate. Reading down a column shows what a rate change does at one term. A rate change of half a point moves the payment by roughly the same amount each step, and the effect is larger on long terms and larger loans.
A term in the table is not a promise that you can get that rate. Lenders quote different rates for different terms, so use the grid to see what a change would cost, not as an offer.
Next steps
To compare two real offers with points and closing costs, use the Mortgage Comparison Calculator. To see the month by month balance for the payment you choose, use the Amortization Schedule Calculator. For two loans side by side, the Loan Comparison Calculator adds total cost.
Assumptions and limits
- The rate is fixed for the whole term and interest is charged monthly.
- Payments are made at the end of each month on the full amount.
- Fees, insurance, taxes and extra payments are not included.
- The loan amount, rates and terms shown when the page opens are examples.
Frequently asked questions
Why seven rows?
Three below, the center and three above give enough range to see the trend without a very long table. Change the step to widen or narrow the range.
Can I use a term that is not a whole number of years?
Yes, if the months come out whole. A term of 2.5 years is 30 monthly payments. Terms from 1 to 50 years are accepted.
What happens if the lowest rate would be negative?
The page asks for a smaller step or a higher center rate. A negative interest rate is not modeled.
What is highlighted in the table?
The row for your center rate, so you can find your starting point and see how the other rows compare with it.