To calculate savings on Public Housing Fund Loans, compare the total repayment amount under standard terms to the adjusted amount after applying savings mechanisms. Savings arise from reduced interest rates, extended loan terms, or principal prepayment. First, determine the original loan amount, interest rate, and term. Calculate total payments using an amortization schedule or the formula: Total Payments = P(r(1+r)^n)/((1+r)^n-1), where P=principal, r=monthly interest rate, and n=number of payments. Second, apply savings factors: if the interest rate decreases by X%, recalculate payments using the new rate. For term extensions, recalculate payments over the longer period. Subtract the adjusted total payments from the original to find savings.

The methodology hinges on interest rate reductions and term adjustments, both of which lower long-term costs. According to the U.S. Department of Housing and Urban Development (HUD), public housing loans in 2022 averaged 4.5% interest, down from 6.8% in 2018. A 2.3% rate reduction on a $500,000 loan over 20 years saves approximately $82,000 in total interest (HUD, 2023). Extended terms also reduce monthly burdens. For example, refinancing a 30-year loan to 40 years at 4.5% cuts monthly payments by 18% but increases total interest by $12,000. However, principal prepayment offsets this: paying an extra $100 monthly on a $500,000 loan saves $95,000 in interest over 10 years (Federal Housing Finance Agency, 2022). These data underscore that savings depend on balancing rate cuts, term extensions, and principal reduction to maximize net benefits.