What Is a Mortgage Rate? How Is the Monthly Payment Calculated?
Your mortgage rate determines how much interest you pay each month. This guide explains commercial and housing-fund rates, and how to use the rate to estimate monthly payments.
The mortgage rate is the annual percentage the bank charges you. The monthly rate equals the annual rate ÷ 12.
There are two main types: commercial loans (the rate floats with the LPR, commonly 3%–4%) and housing-fund loans (lower, usually around 3.1%). A combination loan accrues each part separately.
Once you know the principal, term and annual rate, you can compute the monthly payment with the equal-installment or equal-principal formula. This tool has both built in — just enter the amount, term and rate.