Several different models of financial calculators are available from various manufacturers, and they all use the same basic steps to calculate loan payments. The financial details of any loan consist of four factors. If you know three, you can calculate the fourth -- such as a mortgage payment -- using a financial calculator. Some practice with your specific model of calculator will soon have you calculating mortgage payments in a few seconds.
Review how to enter data for your specific model of financial calculator. Companies that make financial calculators include Hewlett Packard (HP) and Texas Instruments (TI). In most cases you enter the data, such as loan amount or term, and then press the key for that type of data. For example, on the HP17B and 19B models, the data types are listed on the screen and you press the appropriate arrow key to enter the data.
Enter the three mortgage loan terms which you know -- the number of payments, the interest rate and the amount of the loan -- into the calculator. The number of payments is the term of the loan in years times 12. For example, a 15-year mortgage will have 180 payments. The entry key will be a N or n. The entered interest rate is per period. Divide the annual mortgage rate by 12 and enter using the I, i or I/Y key. The amount of the mortgage loan is the present value entered using the PV key.
Select the payment (PMT or pmt) key or compute plus payment -- CPT plus PMT -- keys to calculate the monthly mortgage payment. As an example, enter 180 for the number of payments on a 15-year mortgage. Next, enter 0.5 for the monthly interest rate on a 6 percent loan and $100,000 for the amount of the loan. The resulting payment amount should be $843.86.
- Clear or reset the data in the financial calculator before starting a new loan payment calculation.
- Future value -- FV -- is the fifth possible component of a financial calculation. For mortgage loans, future value will always be zero. If you are getting payment results which do not make sense, enter a zero for FV and recalculate.
- Some financial calculators let you set the number of payments per year. If this is possible, set the number of payments to 12 per year and use the number of years for the loan for N and the annual interest rate for INT.
- Mortgage loan payments are calculated as paid at the end of the month. Your calculator can be set to calculate for either beginning or end-of-period payments. If your payment calculation results are too low, make sure you have payments set to be calculated for the end of each period.
Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.