How to Calculate the Weighted Average Interest Rate

by

Fixed-Rate Mortgage Payment Calculator

30 Years Fixed 20 Years Fixed 15 Years Fixed 10 Years Fixed

Estimated Monthly Payment

$0.00
Principal & Interest $0.00
Taxes & Insurance $0.00
function calculateMortgage() { var homePrice = parseFloat(document.getElementById('homePrice').value); var downPayment = parseFloat(document.getElementById('downPayment').value); var annualRate = parseFloat(document.getElementById('interestRate').value); var years = parseInt(document.getElementById('loanTerm').value); var annualTax = parseFloat(document.getElementById('propertyTax').value); var annualIns = parseFloat(document.getElementById('insurance').value); if (isNaN(homePrice) || isNaN(downPayment) || isNaN(annualRate) || homePrice <= downPayment) { alert("Please enter valid numbers. The home price must be greater than the down payment."); return; } var principal = homePrice – downPayment; var monthlyRate = (annualRate / 100) / 12; var numberOfPayments = years * 12; var piPayment; if (monthlyRate === 0) { piPayment = principal / numberOfPayments; } else { piPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1); } var monthlyTax = annualTax / 12; var monthlyIns = annualIns / 12; var totalMonthly = piPayment + monthlyTax + monthlyIns; document.getElementById('piAmount').innerText = '$' + piPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('tiAmount').innerText = '$' + (monthlyTax + monthlyIns).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('totalMonthly').innerText = '$' + totalMonthly.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('mortgageResult').style.display = 'block'; }

Understanding Your Mortgage Payment Calculation

Purchasing a home is one of the most significant financial decisions you will make. This mortgage calculator helps you estimate your monthly obligation by breaking down the core components of a housing payment, often referred to as PITI (Principal, Interest, Taxes, and Insurance).

What Factors Influence Your Monthly Payment?

  • Principal: This is the actual amount of money you borrow from the lender. As you make payments, your loan balance decreases, and you build equity in the home.
  • Interest Rate: The cost of borrowing the money, expressed as a percentage. Even a 0.5% difference in interest rates can save or cost you tens of thousands of dollars over the life of the loan.
  • Loan Term: The duration of the loan. While a 30-year term offers lower monthly payments, a 15-year term allows you to pay off the debt faster and save significantly on interest.
  • Down Payment: The cash you pay upfront. A higher down payment reduces the loan amount and may help you avoid Private Mortgage Insurance (PMI) if you reach the 20% threshold.
  • Property Taxes & Insurance: Most lenders require an escrow account where a portion of your monthly payment is set aside to pay annual property taxes and homeowners insurance premiums.

Example Calculation

Suppose you purchase a home for $450,000 with a $90,000 (20%) down payment. If you secure a 30-year fixed rate at 7%:

1. Your loan principal would be $360,000.
2. Your monthly Principal & Interest payment would be approximately $2,395.09.
3. If your annual taxes are $3,600 ($300/mo) and insurance is $1,200 ($100/mo), your total monthly payment would be $2,795.09.

How to Use This Tool for Better Financial Planning

Use this calculator to "stress test" your budget. We recommend keeping your total housing costs—including taxes and insurance—below 28% of your gross monthly income. By adjusting the interest rate field, you can see how market fluctuations impact your purchasing power, helping you decide exactly when to lock in a rate or wait for a better opportunity.

Leave a Comment