Calculate your estimated monthly mortgage payment. Enter the details below.
Understanding the Mortgage Payment Formula
A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial for budgeting and financial planning. The most common type of mortgage payment is based on a fixed interest rate over a set period, resulting in a consistent monthly payment throughout the loan's life. This is known as an amortizing loan.
The Standard Mortgage Payment Formula (Amortizing Loan)
The formula used to calculate the fixed monthly payment (M) for an amortizing loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest).
P = The principal loan amount (the total amount you borrowed).
i = Your monthly interest rate. This is calculated by dividing your annual interest rate by 12 (e.g., if your annual rate is 4.5%, your monthly rate is 0.045 / 12 = 0.00375).
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the number of years in your loan term by 12 (e.g., a 30-year loan has 30 * 12 = 360 payments).
How the Formula Works
The formula essentially balances the total interest paid over the life of the loan with the principal repayment. In the early years of a mortgage, a larger portion of your monthly payment goes towards interest. As time progresses, more of your payment is allocated to paying down the principal balance.
Important Considerations:
Principal & Interest (P&I) Only: This calculator computes only the principal and interest portion of your mortgage payment. Your actual monthly housing expense will likely be higher and may include:
Property Taxes: Taxes assessed by your local government.
Homeowner's Insurance: Insurance to protect against damage or loss.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's value.
Homeowner Association (HOA) Dues: Fees for living in a community with shared amenities or services.
Annual Interest Rate: Ensure you enter the rate as a percentage (e.g., 4.5 for 4.5%).
Loan Term: This is the total duration of the loan in years (e.g., 15, 20, 30 years).
Estimates: This calculation provides an estimate. Actual loan terms, fees, and lender-specific calculations may vary. It's always best to consult with a mortgage lender for a precise quote.
Use Cases:
This calculator is invaluable for:
Prospective Homebuyers: To estimate affordability and determine what loan amount they can manage.
Homeowners Refinancing: To compare potential new payment amounts against their current mortgage.
Financial Planning: To understand the long-term cost of borrowing for a home.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var resultDiv = document.getElementById("result");
// Clear previous results
resultDiv.innerHTML = "";
// Validate inputs
if (isNaN(principal) || principal <= 0) {
resultDiv.innerHTML = "Please enter a valid loan principal amount.";
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
resultDiv.innerHTML = "Please enter a valid annual interest rate.";
return;
}
if (isNaN(loanTermYears) || loanTermYears <= 0) {
resultDiv.innerHTML = "Please enter a valid loan term in years.";
return;
}
// Calculate monthly interest rate
var monthlyInterestRate = annualInterestRate / 100 / 12;
// Calculate total number of payments
var numberOfPayments = loanTermYears * 12;
var monthlyPayment = 0;
// Check if interest rate is 0 to avoid division by zero in formula
if (monthlyInterestRate === 0) {
monthlyPayment = principal / numberOfPayments;
} else {
// Mortgage payment formula
var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
monthlyPayment = principal * (numerator / denominator);
}
// Format the result to two decimal places and add a currency symbol
var formattedMonthlyPayment = "$" + monthlyPayment.toFixed(2);
resultDiv.innerHTML = "Estimated Monthly Payment: " + formattedMonthlyPayment + "";
}