Calculating your potential mortgage payment is one of the most critical steps in the home-buying process. While the listing price of a home gives you a ballpark figure, your actual monthly financial obligation includes several distinct components. This Mortgage Payment Calculator helps break down those costs so you can budget effectively.
Components of a Mortgage Payment (PITI)
Real estate experts often refer to mortgage payments as PITI, which stands for Principal, Interest, Taxes, and Insurance. Here is what each entails:
Principal: The portion of your payment that goes directly toward reducing the loan balance. In the early years of a standard amortization schedule, this amount is small but grows over time.
Interest: The fee charged by the lender for borrowing the money. Your interest rate significantly impacts your monthly payment. For example, on a $400,000 loan, a 1% difference in interest rate can change your payment by hundreds of dollars.
Taxes: Property taxes are assessed by your local government and are usually bundled into your monthly mortgage payment. These funds are held in escrow by your lender until payment is due.
Insurance: Homeowners insurance protects your property against damage. Like taxes, this is often paid monthly into an escrow account.
How Loan Term Affects Your Payment
The duration of your loan, typically 15 or 30 years, plays a major role in your monthly cash flow. A 30-year fixed-rate mortgage offers lower monthly payments because the repayment is spread out over a longer period. However, you will pay significantly more in total interest over the life of the loan.
Conversely, a 15-year mortgage will have higher monthly payments, but you build equity faster and pay much less interest in the long run. Use the calculator above to toggle between terms and see the difference in monthly affordability.
The Impact of Down Payment
Your down payment reduces the principal loan amount. A larger down payment not only lowers your monthly Principal & Interest payment but may also eliminate the need for Private Mortgage Insurance (PMI). Generally, if you put down less than 20% of the home's purchase price, lenders will require PMI, which is an additional monthly cost not calculated in the standard principal and interest formula.
function calculateMortgage() {
// Get values
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var annualTax = parseFloat(document.getElementById("propertyTax").value);
var annualInsurance = parseFloat(document.getElementById("homeInsurance").value);
var monthlyHOA = parseFloat(document.getElementById("hoaFees").value);
// Validation and Defaulting
if (isNaN(homePrice)) homePrice = 0;
if (isNaN(downPayment)) downPayment = 0;
if (isNaN(interestRate)) interestRate = 0;
if (isNaN(annualTax)) annualTax = 0;
if (isNaN(annualInsurance)) annualInsurance = 0;
if (isNaN(monthlyHOA)) monthlyHOA = 0;
// Core Calculation Logic
var principal = homePrice – downPayment;
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPrincipalAndInterest = 0;
// Handle zero interest case or standard case
if (interestRate === 0) {
monthlyPrincipalAndInterest = principal / numberOfPayments;
} else {
// Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var pow = Math.pow((1 + monthlyInterestRate), numberOfPayments);
monthlyPrincipalAndInterest = principal * ((monthlyInterestRate * pow) / (pow – 1));
}
// Handle edge case where inputs are missing or result is invalid
if (isNaN(monthlyPrincipalAndInterest) || !isFinite(monthlyPrincipalAndInterest)) {
monthlyPrincipalAndInterest = 0;
}
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var totalMonthlyPayment = monthlyPrincipalAndInterest + monthlyTax + monthlyInsurance + monthlyHOA;
// Update UI
document.getElementById("piResult").innerText = "$" + monthlyPrincipalAndInterest.toFixed(2);
document.getElementById("taxResult").innerText = "$" + monthlyTax.toFixed(2);
document.getElementById("insResult").innerText = "$" + monthlyInsurance.toFixed(2);
document.getElementById("hoaResult").innerText = "$" + monthlyHOA.toFixed(2);
document.getElementById("totalResult").innerText = "$" + totalMonthlyPayment.toFixed(2);
// Show result box
document.getElementById("resultBox").style.display = "block";
}