Purchasing a home is one of the most significant financial decisions you will ever make. Our Mortgage Payment Calculator is designed to provide you with a comprehensive breakdown of your monthly financial obligations. Unlike simple calculators that only look at the loan principal, this tool factors in critical components like property taxes and homeowners insurance to give you a realistic "out-the-door" monthly cost.
How the Mortgage Formula Works
The core of a mortgage calculation determines the monthly principal and interest payment using the standard amortization formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
M = Total monthly payment
P = Principal loan amount (Home Price minus Down Payment)
i = Monthly interest rate (Annual Rate divided by 12)
n = Number of payments (Loan Term in years multiplied by 12)
Components of Your Monthly Payment
When budgeting for a new home, it is crucial to understand that your check to the bank includes more than just debt repayment. This calculator breaks down:
Principal: The money that goes directly towards reducing your loan balance.
Interest: The cost of borrowing money, paid to the lender. In the early years of a 30-year fixed mortgage, this makes up the majority of your payment.
Escrow Costs: This includes Property Taxes and Homeowners Insurance. Lenders often collect 1/12th of these annual costs every month to pay the bills on your behalf when they are due.
Example Calculation
For example, if you purchase a home for $300,000 with a 20% down payment ($60,000), your loan amount is $240,000. At a 6.5% interest rate over a 30-year term:
Your Principal & Interest payment would be approximately $1,517.
If your annual taxes are $3,000 ($250/mo) and insurance is $1,200 ($100/mo), your total monthly obligation rises to roughly $1,867.
Use the inputs above to adjust these figures based on your specific loan offer and local tax rates.
function calculateMortgage() {
// Get input values
var price = parseFloat(document.getElementById('mc_home_price').value);
var downPayment = parseFloat(document.getElementById('mc_down_payment').value);
var rate = parseFloat(document.getElementById('mc_interest_rate').value);
var years = parseFloat(document.getElementById('mc_loan_term').value);
var annualTax = parseFloat(document.getElementById('mc_property_tax').value);
var annualInsurance = parseFloat(document.getElementById('mc_insurance').value);
// Validation
if (isNaN(price) || isNaN(downPayment) || isNaN(rate) || isNaN(years)) {
alert("Please enter valid numbers for Price, Down Payment, Rate, and Term.");
return;
}
// Calculate Loan Variables
var principal = price – downPayment;
var monthlyRate = rate / 100 / 12;
var numberOfPayments = years * 12;
// Mortgage Formula Calculation (Principal & Interest)
var monthlyPI = 0;
if (rate === 0) {
monthlyPI = principal / numberOfPayments;
} else {
// formula: P * ( r * (1+r)^n ) / ( (1+r)^n – 1 )
monthlyPI = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
}
// Calculate Escrow (Tax & Insurance)
var monthlyTax = 0;
var monthlyInsurance = 0;
if (!isNaN(annualTax)) {
monthlyTax = annualTax / 12;
}
if (!isNaN(annualInsurance)) {
monthlyInsurance = annualInsurance / 12;
}
// Totals
var totalMonthlyPayment = monthlyPI + monthlyTax + monthlyInsurance;
var totalCostOfLoan = (monthlyPI * numberOfPayments);
var totalInterestPaid = totalCostOfLoan – principal;
// Check for non-finite numbers (e.g. division by zero errors)
if (!isFinite(totalMonthlyPayment)) {
alert("Calculation error. Please check your inputs.");
return;
}
// Update UI
document.getElementById('mc_results_area').style.display = 'block';
document.getElementById('mc_total_monthly').innerText = "$" + totalMonthlyPayment.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('mc_pi_monthly').innerText = "$" + monthlyPI.toLocaleString('en-US', {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('mc_total_interest').innerText = "$" + totalInterestPaid.toLocaleString('en-US', {minimumFractionDigits: 0, maximumFractionDigits: 0});
}