The Financeable Principal calculator computes the amount one can borrow (Principal) as a function of a monthly payment (MP), annual interest rate (i), duration in months (n).  This is based on the Amortization formula but solved for Principal.

Inputs

• MP - the monthly payment one is willing to pay for mortgage expenses
• n - the number of months in the duration of the loan
  • n = 360 for a 30 year loan
  • n = 180 for a 15 year loan
  • n = 120 for a 10 year loan
• i - the annual interest rate entered as a percentage

Description

In the beginning of mortgage,  Loan Principal and Interest over the life
 of a Fixed Rate Loan.   Note: the sum of both lines
remains  constant at $996.53 throughout the life of the loan.  especially the first year, the majority of one's payment is interest (see blue line on plot).  

The default units for the Monthly Payment (MP) and the Principal (P) that is given as an answer is United States dollars (USD).  Other currency units are available.  In this way one can see how many Euros of principal one can afford base one payments in U.S. dollars, Canadian Dollars, Great Britain Pounds, Australian Dollars, Swiss Francs, Euros, Russian Rubles, Indian Rupees, Chinese Yuan, Japanese Yen, Brazilian Reals, Mexican Pesos, and South African Rands.

The Math

The Amortization Formula computes the periodic (e.g. monthly) payment required to payoff a loan's principal and interest in over a set number of periods (e.g. 30 years) at a fixed interest rate.  The formula is as follows:

          `pp = (P * i)/(1 - (1+i)^-n)` where

• pp is the period payment
• P is the principal of the loan
• i is the periodic interest rate
• n is the number of periods.

This calculator uses the same formula but solved for Principal (P) as follows:

         `P = ((1 - (1+i)^-n) * pp)/ i`