Navigating the home-buying process involves understanding your potential monthly mortgage payments. This calculator is designed to provide a clear estimate of the principal and interest portion of your mortgage payment, helping you plan your finances effectively. UWCU (United Wisconsin Credit Union) offers various mortgage options, and knowing the estimated cost is a crucial first step.
How the Mortgage Payment is Calculated
The standard formula used to calculate the monthly payment (M) for a mortgage is based on an annuity formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest).
P = The principal loan amount. This is the home price minus your down payment.
i = Your monthly interest rate. This is your annual interest rate divided by 12.
n = The total number of payments over the loan's lifetime. This is the loan term in years multiplied by 12.
Inputs Explained:
Home Price: The total agreed-upon price of the home you intend to purchase.
Down Payment (%): The percentage of the home price you pay upfront. A larger down payment reduces the loan principal, leading to lower monthly payments and potentially avoiding Private Mortgage Insurance (PMI).
Loan Term (Years): The duration over which you will repay the loan. Common terms are 15 or 30 years. Longer terms usually mean lower monthly payments but more interest paid over time.
Annual Interest Rate (%): The yearly interest rate charged by the lender. This rate is crucial as it significantly impacts your monthly payment and the total interest paid. UWCU, like other lenders, will offer rates based on market conditions, your creditworthiness, and loan terms.
Example Calculation:
Let's say you are looking to buy a home with the following details:
Total Number of Payments (n): 30 years * 12 months/year = 360
Using the formula M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]:
M = 280000 [ 0.005(1 + 0.005)^360 ] / [ (1 + 0.005)^360 – 1]
M = 280000 [ 0.005(1.005)^360 ] / [ (1.005)^360 – 1]
M = 280000 [ 0.005 * 6.022575 ] / [ 6.022575 – 1]
M = 280000 [ 0.030112875 ] / [ 5.022575 ]
M = 8431.605 / 5.022575
M ≈ $1,678.91
This estimated monthly payment of approximately $1,678.91 covers only the principal and interest. Remember to factor in other costs like property taxes, homeowner's insurance, and potentially PMI, which will increase your total housing expense.
Important Considerations:
This calculator provides an estimate for principal and interest. Your actual mortgage payment will likely be higher due to:
Property Taxes: Amounts vary significantly by location.
Homeowner's Insurance: Required by lenders to protect against damage.
Private Mortgage Insurance (PMI): Typically required if your down payment is less than 20%.
Homeowner Association (HOA) Fees: If applicable to the property.
UWCU offers competitive rates and personalized service to help you find the best mortgage solution. We recommend contacting a UWCU mortgage specialist to get a personalized quote and discuss all aspects of your home loan.
function calculateMortgage() {
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPaymentPercent = parseFloat(document.getElementById("downPayment").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var monthlyPayment = 0;
// Basic validation
if (isNaN(homePrice) || homePrice <= 0 ||
isNaN(downPaymentPercent) || downPaymentPercent 100 ||
isNaN(loanTermYears) || loanTermYears <= 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0) {
document.getElementById("monthlyPayment").innerText = "Invalid input";
return;
}
var downPaymentAmount = homePrice * (downPaymentPercent / 100);
var principalLoanAmount = homePrice – downPaymentAmount;
if (principalLoanAmount <= 0) {
document.getElementById("monthlyPayment").innerText = "$0.00";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfPayments = loanTermYears * 12;
// Check for zero interest rate to avoid division by zero in formula
if (monthlyInterestRate === 0) {
monthlyPayment = principalLoanAmount / numberOfPayments;
} else {
var numerator = principalLoanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments));
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
monthlyPayment = numerator / denominator;
}
// Format the result to two decimal places
if (!isNaN(monthlyPayment)) {
document.getElementById("monthlyPayment").innerText = "$" + monthlyPayment.toFixed(2);
} else {
document.getElementById("monthlyPayment").innerText = "Error";
}
}