How to Calculate Percentage Interest Rate – Cost Calculator

Mortgage Payment Calculator

Loan Amount ($)

Annual Interest Rate (%)

Loan Term (Years)

Understanding Your Mortgage Payment

A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial. The primary components that determine your mortgage payment are the loan amount, the annual interest rate, and the loan term. This calculator helps you estimate your principal and interest payment based on these factors.

Loan Amount

This is the total sum of money you are borrowing from the lender to purchase your home. It's typically the purchase price of the home minus your down payment.

Annual Interest Rate

The interest rate is the cost of borrowing money, expressed as a percentage of the loan amount. A lower interest rate means you'll pay less in interest over the life of the loan.

Loan Term

The loan term is the length of time you have to repay the loan. Common terms include 15, 20, and 30 years. A shorter loan term generally results in higher monthly payments but less total interest paid. Conversely, a longer loan term usually means lower monthly payments but more interest paid over time.

How the Calculation Works

The monthly mortgage payment (P&I – Principal and Interest) is calculated using the following formula:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]</code


  Where:
  
    M = Your total monthly mortgage payment
    P = The principal loan amount
    i = Your monthly interest rate (annual rate divided by 12)
    n = The total number of payments over the loan's lifetime (loan term in years multiplied by 12)
  
  This calculator provides an estimate for the principal and interest portion of your mortgage payment. It does not include other potential costs such as property taxes, homeowners insurance, or private mortgage insurance (PMI), which are often included in your total monthly housing expense (often referred to as PITI).
  Example Calculation
  Let's say you are taking out a mortgage for $250,000 with an annual interest rate of 4.5% and a loan term of 30 years.
  
    P = $250,000
    Annual interest rate = 4.5%
    i = 4.5% / 12 / 100 = 0.00375
    Loan term = 30 years
    n = 30 * 12 = 360
  
  Using the formula, the estimated monthly principal and interest payment would be approximately $1,266.92.



  function calculateMortgage() {
    var loanAmount = parseFloat(document.getElementById("loanAmount").value);
    var interestRate = parseFloat(document.getElementById("interestRate").value);
    var loanTerm = parseFloat(document.getElementById("loanTerm").value);
    var resultDiv = document.getElementById("result");
    if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(loanTerm) || loanAmount <= 0 || interestRate < 0 || loanTerm <= 0) {
      resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
      return;
    }
    var monthlyInterestRate = interestRate / 100 / 12;
    var numberOfPayments = loanTerm * 12;
    var monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) - 1);
    if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
        resultDiv.innerHTML = "Calculation resulted in an invalid number. Please check your inputs.";
        return;
    }
    resultDiv.innerHTML = "Estimated Monthly Payment (Principal & Interest): $" + monthlyPayment.toFixed(2) + "";
  }