A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial. The standard mortgage payment formula, often referred to as an amortizing loan calculation, determines a fixed monthly payment that includes both principal and interest over the life of the loan.
Key Components:
Loan Amount (Principal): This is the total amount of money you are borrowing to purchase your home.
Annual Interest Rate: This is the yearly percentage charged by the lender for borrowing the money. For calculations, we convert this to a monthly rate.
Loan Term: This is the total duration of the loan, usually expressed in years. For calculations, we convert this to the total number of monthly payments.
The Formula:
The monthly mortgage payment (M) is calculated using the following formula:
n = Total number of payments (Loan term in years * 12)
Example:
Let's say you're buying a home with a loan of $250,000 at an annual interest rate of 6.5% for 30 years.
P = $250,000
Annual Interest Rate = 6.5%
i = (6.5 / 100) / 12 = 0.00541667
Loan Term = 30 years
n = 30 * 12 = 360
Using the formula, the estimated monthly payment (principal and interest) would be approximately $1,579.89.
This calculator provides an estimate for the principal and interest portion of your mortgage payment. Remember that your actual monthly housing expense will likely be higher, as it often includes property taxes, homeowner's insurance, and potentially private mortgage insurance (PMI) or HOA fees.
function calculateMortgagePayment() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPaymentDisplay = document.getElementById("monthlyPayment");
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0) {
monthlyPaymentDisplay.textContent = "Please enter valid numbers.";
monthlyPaymentDisplay.style.color = "red";
return;
}
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
monthlyPaymentDisplay.textContent = "Calculation error. Please check inputs.";
monthlyPaymentDisplay.style.color = "red";
return;
}
monthlyPaymentDisplay.textContent = "$" + monthlyPayment.toFixed(2);
monthlyPaymentDisplay.style.color = "#2e7d32";
}