Loans & Mortgages
Maximum loan
The reverse amortisation formula that converts a payment into a loan.
The Formula
Loan = Mortgage payment x (1 - (1 + r)^-n) / r
The reverse amortisation formula that converts a payment into a loan.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| M | Mortgage payment | currency | The cap minus tax and insurance. |
| r | Monthly rate | rate | Annual rate divided by twelve. |
| n | Payments | count | Term in months. |
What Each Symbol Means
Mcurrency
Mortgage payment
The cap minus tax and insurance.
rrate
Monthly rate
Annual rate divided by twelve.
ncount
Payments
Term in months.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate home affordability 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 Home Affordability, filed under Finance. Every number the guide produces comes from substituting into this one line.