Mortgage Calculator Math Error

This program runs fine, but the monthly payment it returns is totally off. For a principal amount of $400,000, interest rate of 11%, and a 10-year payment period, it returns the mo

Solution 1:

The problem is in your interest rate used. You request the annual interest rate and never convert to a monthly interest rate.

From https://en.wikipedia.org/wiki/Mortgage_calculator#Monthly_payment_formula:

r - the monthly interest rate, expressed as a decimal, not a percentage. Since the quoted yearly percentage rate is not a compounded rate, the monthly percentage rate is simply the yearly percentage rate divided by 12; dividing the monthly percentage rate by 100 gives r, the monthly rate expressed as a decimal.

I just tried this on my computer and dividing the interest rate by 12 calculated $5510/month which agrees with other mortgage calculators.