where 
 so to solve for the monthly mortgage payment m you plug in the principal p the monthly interest rate i and the number of months n if you want to calculate the mortgage interest alone here s a fast formula for that fixed rate mortgages vs adjustable rate mortgages arms adjustable rate mortgages arms are something of a hybrid between fixed and variable rate loans they have both fixed and variable rate components and are also usually issued as amortized loans with steady installment payments over the life of the loan they require a fixed rate of interest in the first few years of the loan followed by variable rate interest after that amortization schedules can be slightly more complex since rates for a portion of these loans are variable thus investors can expect to have varying payment amounts rather than consistent payments as with a fixed rate loan people who don t mind the unpredictability of rising and falling interest rates may favor arms borrowers who know that they either will refinance or won t hold the property for a long period of time also tend to prefer arms these borrowers typically bet on rates to fall in the future if rates do fall then a borrower s interest decreases over time fixed rate amortized vs non amortized mortgagesmost amortized loans come with fixed interest rates although there are cases where non amortizing loans have fixed rates too amortized fixed rate mortgage loans are among the most common types of mortgages offered by lenders these loans have fixed rates of interest over the life of the loan and steady installment payments a fixed rate amortizing mortgage loan requires a basis amortization schedule to be generated by the lender you can easily calculate an amortization schedule with a fixed rate interest when a loan is issued that s because the interest rate in a fixed rate mortgage doesn t change for every installment payment this allows a lender to create a payment schedule with constant payments over the life of the loan as the loan matures the amortization schedule requires the borrower to pay more principal and less interest with each payment this differs from a variable rate mortgage where a borrower has to contend with varying loan payment amounts that fluctuate with interest rate movements fixed rate mortgages can also be issued as non amortized loans these are usually referred to as balloon payment loans or interest only loans lenders have some flexibility in how they can structure these alternative loans with fixed interest rates a common structuring for balloon payment loans is to charge borrowers annual deferred interest this requires interest to be calculated annually based on the borrower s annual interest rate interest is then deferred and added to a lump sum balloon payment at the end of the loan in an interest only fixed rate loan borrowers pay only interest in scheduled payments these loans typically charge monthly interest based on a fixed rate borrowers make monthly payments of interest with no payment of principal required until a specified date if you have a fixed rate mortgage you may be able to refinance it at the prevailing rate if it is lower keep in mind though that you may have to pay additional fees to do so advantages and disadvantages of fixed rate mortgagesvarying benefits and risks are involved for both borrowers and lenders in fixed rate mortgage loans what may be a benefit for one is often a drawback for the other the following are the most common pros and cons of fixed rate mortgages many consumers prefer fixed rate mortgages because the rate remains constant for the life of the loan this provides them with a guarantee that the loan won t change even if interest rates go up it also provides borrowers with predictability since they always know how much they ll have to pay this allows them to budget for other financial obligations lenders also benefit from fixed rate products this is especially true when interest rates drop in environments where rates are low lenders can profit from the higher interest payments made by borrowers on their fixed rate home loans borrowers have no flexibility when it comes to interest rates or payments with fixed rate mortgages so when interest rates drop fixed rate borrowers end up paying more than people who have adjustable rate mortgages borrowers typically seek to lock in lower rates of interest to save money over time when rates rise a borrower maintains a lower payment compared to current market conditions a lending bank on the other hand doesn t earn as much as it could from the prevailing higher interest rates foregoing profits from issuing fixed rate mortgages that could be earning higher interest over time in a variable rate scenario protects borrowers against interest rate volatilitypredictable payments for borrowershigher profits for lenders when rates are lowno flexibility for borrowersborrowers pay more when rates are lowlenders earn less when rates are high