Home Buying
Loan amount from price and deposit
The mortgage covers the difference between what the property costs and what the buyer pays upfront. Everything the lender charges as a percentage is priced against this figure.
The Formula
loan amount = purchase price - down payment
The mortgage covers the difference between what the property costs and what the buyer pays upfront. Everything the lender charges as a percentage is priced against this figure.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| P | Purchase price | currency | The agreed price of the property. |
| D | Down payment | currency | The cash paid upfront by the buyer. |
| L | Loan amount | currency | The sum the mortgage has to cover. |
What Each Symbol Means
Pcurrency
Purchase price
The agreed price of the property.
Dcurrency
Down payment
The cash paid upfront by the buyer.
Lcurrency
Loan amount
The sum the mortgage has to cover.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate closing costs page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Closing Costs, filed under Finance. Every number the guide produces comes from substituting into this one line.