# PMT Function

The PMT function in Excel calculates the payment for a loan that has constant payments and a constant interest rate. This formula will not work with a flexible interest rate.

` =PMT (rate, nper, pv, [fv], [type])  `
• Rate:     Interest Rate per period
• Nper:    The number of periods
• Pv:         Present value of loan/investment
• Fv:         Future value of the loan/investment – This is optional. If left blank, it will default to zero.
• Type:     Defines if the payment is made at the start or end of the period. If left blank, defaults to zero.

0 – Payment is made at the end of the period
1 – Payment is made at the beginning of the period

## PMT Function in Excel Example

In the above example, we are taking out a loan for \$225,000 with a 30 year fixed interest rate of 3.75% (Very good rate).  Over 30 years, we end up paying \$375,123.63, with \$150,123.63 in interest.

The above calculation using the PMT Function does not account for Homeowners Insurance or local/state taxes. Modifying the spreadsheet to include these calculations is very easy.

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