Buying a home is a significant financial undertaking, and understanding your mortgage payment is crucial for budgeting and financial planning. This Home Loan Affordability Calculator helps you estimate your monthly mortgage payment based on the loan amount, interest rate, and loan term.
The Math Behind Your Mortgage Payment
The standard formula used to calculate the monthly payment (M) for a mortgage is based on an amortizing loan:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the amount you borrow)
i = Monthly interest rate (Annual interest rate / 12)
n = Total number of payments (Loan term in years * 12)
Our calculator takes your inputs for Loan Amount, Annual Interest Rate, and Loan Term (in years) and converts them into the values needed for this formula.
The Loan Amount is directly used as 'P'.
The Annual Interest Rate is divided by 12 to get the monthly interest rate 'i'. For example, a 4.5% annual rate becomes 0.045 / 12 = 0.00375.
The Loan Term (Years) is multiplied by 12 to get the total number of monthly payments 'n'. A 30-year term means 30 * 12 = 360 payments.
The calculator then computes your estimated monthly principal and interest payment. It also calculates the total interest paid over the life of the loan and the total amount repaid by summing up all monthly payments.
How to Use This Calculator
1. Loan Amount: Enter the total amount of money you plan to borrow for your home purchase.
2. Annual Interest Rate: Input the yearly interest rate offered by your lender. This is usually expressed as a percentage (e.g., 4.5%).
3. Loan Term (Years): Specify how many years you plan to take to repay the loan. Common terms are 15, 20, or 30 years.
After entering these details, click "Calculate Monthly Payment." The results will show your estimated monthly mortgage payment, the total interest you'll pay over the loan's lifetime, and the total amount you will have repaid.
Why This Matters
Understanding your potential monthly payment helps you:
Budget Effectively: Ensure the mortgage payment fits comfortably within your monthly income and expenses.
Compare Loan Offers: Evaluate different interest rates and loan terms from various lenders.
Assess Affordability: Determine if a particular home price is within your financial reach.
Plan for the Future: Anticipate the total cost of homeownership over the long term.
Remember that this calculator provides an estimate for principal and interest only. Your actual monthly housing payment (often called PITI) will also include property taxes, homeowner's insurance, and potentially private mortgage insurance (PMI) or HOA fees.
function calculateHomeLoan() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var monthlyPaymentDisplay = document.getElementById("monthlyPaymentDisplay");
var totalInterestDisplay = document.getElementById("totalInterestDisplay");
var totalRepaymentDisplay = document.getElementById("totalRepaymentDisplay");
// Clear previous results
monthlyPaymentDisplay.textContent = "$0.00";
totalInterestDisplay.textContent = "Total Interest Paid: $0.00";
totalRepaymentDisplay.textContent = "Total Amount Repaid: $0.00";
// Validate inputs
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) ||
loanAmount <= 0 || annualInterestRate < 0 || loanTermYears 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle case of 0% interest rate
monthlyPayment = loanAmount / numberOfPayments;
}
// Calculate total repayment and total interest
totalRepayment = monthlyPayment * numberOfPayments;
totalInterest = totalRepayment – loanAmount;
// Format and display results
monthlyPaymentDisplay.textContent = "$" + monthlyPayment.toFixed(2);
totalInterestDisplay.textContent = "Total Interest Paid: $" + totalInterest.toFixed(2);
totalRepaymentDisplay.textContent = "Total Amount Repaid: $" + totalRepayment.toFixed(2);
}