When planning to purchase a home, understanding the components of your monthly mortgage payment is crucial for financial planning. Most borrowers focus solely on the principal and interest, but the "PITI" (Principal, Interest, Taxes, and Insurance) calculation provides a much more accurate picture of monthly affordability.
Key Components Calculated
Principal & Interest: This is the core of your loan repayment. The principal pays down the loan balance, while interest is the cost of borrowing money. In the early years of a 30-year fixed mortgage, a larger portion of your payment goes toward interest.
Property Taxes: Local governments assess taxes based on your property's value. These are typically held in an escrow account by your lender and paid annually on your behalf, but they accrue monthly.
Homeowners Insurance: Lenders require insurance to protect the asset against damage from fire, theft, or natural disasters. Like taxes, this is usually divided into monthly installments.
HOA Fees: If you buy a condo or a home in a planned community, Homeowners Association fees are paid directly to the association but dramatically impact your monthly housing budget.
How Interest Rates Affect Your Payment
Even a small fluctuation in interest rates can significantly change your monthly obligation. For example, on a $300,000 loan, the difference between a 6.0% and a 7.0% interest rate can increase your monthly payment by nearly $200. Using a mortgage calculator allows you to stress-test your budget against potential rate changes before locking in a loan.
Debt-to-Income Ratio (DTI)
Lenders use your total monthly housing payment (calculated above) to determine your Debt-to-Income ratio. Generally, lenders prefer your total housing costs not to exceed 28% of your gross monthly income, and your total debt (including cars, student loans, and credit cards) not to exceed 36% to 43%.
function calculateMortgage() {
// 1. Get Input Values by ID
var homePrice = parseFloat(document.getElementById('homePrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var loanTermYears = parseInt(document.getElementById('loanTerm').value);
var interestRateAnnual = parseFloat(document.getElementById('interestRate').value);
var annualTax = parseFloat(document.getElementById('propertyTax').value);
var annualInsurance = parseFloat(document.getElementById('homeInsurance').value);
var monthlyHOA = parseFloat(document.getElementById('hoaFees').value);
// 2. Validate Inputs
if (isNaN(homePrice) || homePrice <= 0) {
alert("Please enter a valid Home Price.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
downPayment = 0;
}
if (isNaN(interestRateAnnual) || interestRateAnnual < 0) {
interestRateAnnual = 0;
}
if (isNaN(annualTax)) annualTax = 0;
if (isNaN(annualInsurance)) annualInsurance = 0;
if (isNaN(monthlyHOA)) monthlyHOA = 0;
// 3. Perform Calculations
var loanAmount = homePrice – downPayment;
// Handle case where down payment exceeds price
if (loanAmount 0 && monthlyInterestRate > 0) {
monthlyPrincipalInterest = loanAmount *
(monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) /
(Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else if (loanAmount > 0 && monthlyInterestRate === 0) {
// Zero interest loan
monthlyPrincipalInterest = loanAmount / numberOfPayments;
}
var monthlyTax = annualTax / 12;
var monthlyInsurance = annualInsurance / 12;
var totalMonthlyPayment = monthlyPrincipalInterest + monthlyTax + monthlyInsurance + monthlyHOA;
// 4. Format Output functions
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
// 5. Update DOM elements
document.getElementById('totalMonthlyPayment').innerText = formatter.format(totalMonthlyPayment);
document.getElementById('piBreakdown').innerText = formatter.format(monthlyPrincipalInterest);
document.getElementById('taxBreakdown').innerText = formatter.format(monthlyTax);
document.getElementById('insBreakdown').innerText = formatter.format(monthlyInsurance);
document.getElementById('hoaBreakdown').innerText = formatter.format(monthlyHOA);
// Show result box
document.getElementById('resultBox').style.display = 'block';
}