A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial for budgeting and financial planning. This calculator helps you estimate the principal and interest portion of your monthly mortgage payment.
The Math Behind the Mortgage Payment
The monthly payment for a fixed-rate mortgage is calculated using a standard annuity formula. The formula accounts for the loan principal, the interest rate, and the loan term. The goal is to divide the total amount repaid over the life of the loan equally into monthly installments.
The formula for the monthly mortgage payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the amount you borrow)
i = Monthly interest rate (annual rate divided by 12)
n = Total number of payments (loan term in years multiplied by 12)
For example, if you borrow $300,000 at an annual interest rate of 3.5% for 30 years:
Plugging these values into the formula results in an estimated monthly principal and interest payment.
What's Included (and Not Included)
This calculator estimates the Principal and Interest (P&I) portion of your mortgage payment. It's important to remember that your actual total monthly housing expense, often called your PITI payment, will likely be higher. PITI stands for:
Principal: The amount borrowed.
Interest: The cost of borrowing the money.
Taxes: Property taxes, which are often collected by the lender in an escrow account.
Insurance: Homeowners insurance, also often collected in escrow.
Many lenders require you to pay these additional amounts along with your P&I payment. These amounts are held in an escrow account and paid out by the lender on your behalf when they are due. This calculator does not include estimates for property taxes, homeowners insurance, or private mortgage insurance (PMI), as these vary greatly by location and individual circumstances.
Who Should Use This Calculator?
This calculator is ideal for:
Prospective Homebuyers: To get a quick estimate of what their monthly mortgage payment might look like for different loan scenarios.
Homeowners: To understand the impact of refinancing or potential changes in interest rates on their current mortgage.
Budget Planners: To incorporate estimated mortgage costs into their overall financial planning.
Remember to consult with a mortgage professional for precise figures and to discuss your specific financial situation.
function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value, 10);
var resultElement = document.getElementById("result");
if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(loanTerm) || loanAmount <= 0 || interestRate < 0 || loanTerm <= 0) {
resultElement.innerHTML = "$0.00Please enter valid numbers.";
resultElement.style.backgroundColor = "#dc3545"; /* Red for error */
return;
}
var monthlyInterestRate = interestRate / 100 / 12;
var numberOfPayments = loanTerm * 12;
var monthlyPayment;
if (monthlyInterestRate > 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle zero interest rate case
monthlyPayment = loanAmount / numberOfPayments;
}
var formattedMonthlyPayment = monthlyPayment.toFixed(2);
resultElement.innerHTML = "$" + formattedMonthlyPayment + "Estimated Monthly Principal & Interest";
resultElement.style.backgroundColor = "var(–success-green)"; /* Green for success */
}
// Optional: Trigger calculation on input change for a more dynamic feel
var loanAmountInput = document.getElementById("loanAmount");
var interestRateInput = document.getElementById("interestRate");
var loanTermInput = document.getElementById("loanTerm");
loanAmountInput.addEventListener("input", calculateMortgage);
interestRateInput.addEventListener("input", calculateMortgage);
loanTermInput.addEventListener("input", calculateMortgage);
// Initial calculation on page load
calculateMortgage();