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# How To Calculate Your Monthly Payment In Excel Using PMT Function

February 13, 2023
5.1K Views

Before you get out your checkbook and buy the house of your dreams, you’ll want to know exactly how much you’ll need to pay every month to cover all of your expenses, especially if you’re buying a property in another state or country with an unfamiliar banking system.

The fastest way to calculate your monthly payment in Excel is by using the PMT function. This simple function will enable you to calculate your payments for just about any loan that requires a monthly payment including car loans, student loans, mortgages, and credit cards. The PMT function is one of many built-in functions that come with Microsoft Excel and is also available in Google Sheets as well as Open Office. What Makes This Method So Fast?

### What is PMT Function in Excel? ( 2026/2019/Mac/online)

The PMT function is used to calculate payments for a loan, mortgage, annuity, or any other fixed-income stream in excel in different versions, especially in 2016/2019/Mac/online. What Does PMT Function Do? If you have loan payments that occur at a fixed interval, and you know how much interest is being charged on that loan, then you can use PMT to find out what your monthly payment will be. The formula takes into account all of those elements the loan amount, the number of periods in the loan (the term), the periodic interest rate (APR), and the number of periods in which these payments are made each year (frequency).

PMT function in excel is used to calculate or discount a stream of payments.

1. It takes three arguments: Pmt, nper, and rate. Pmt is several payments, nor is the total no. of payments and the rate is interesting per annum.

2. Open “Insert function”

3. Select PMT function

4. In order to calculate a monthly mortgage payment, we need the following formula: =PMT(2000,-250000,0.05) where 2000 represents the number of payments (10 years), -250000 represents the amount borrowed (\$250K) and 0.05 represent the annual interest rate (5%).

### Inputting Different Values into PMT Function in WPS Excel

There are three ways you can plug different values into your PMT function. You can input a fixed value, such as 1 for \$1,000 or 10 for \$10,000. Or you can enter in a variable amount based on your specific situation, like \$200,000 if you’re buying a home or \$40 per week if you’re saving for retirement. If you have an interest rate (r) and term length (n), then the formula is

### Common mistakes made with the PMT function in WPS excel

The PMT function is great when you want to calculate a mortgage payment, but it has some limitations. The function assumes that your interest rate stays constant over time. In reality, most loans have an introductory period with a lower rate that changes to a higher one after a few years.

### Why PMT Function Is Better Than Vlookup or Hlookup?

If you’re going to pay off your home in less than 30 years, it’s best to use PMT. That said, if you’re paying off your home in more than 30 years, it’s a good idea to use VLOOKUP or HLOOKUP. Why? Because PMT requires too much rounding for long-term mortgage payments. Let me explain.