Calculating your potential monthly mortgage payment is a crucial first step in the home buying process. This tool helps you estimate not just the repayment of the loan itself (Principal and Interest), but also the additional carrying costs that come with homeownership, such as property taxes and insurance.
How the Formula Works
A standard fixed-rate mortgage payment is calculated using an amortization formula. This ensures that your payment remains the same every month, but the portion of that payment going toward interest decreases over time, while the portion paying down the principal increases.
The core components of your monthly payment include:
Principal: The money you borrowed to buy the house.
Interest: The cost of borrowing money from your lender.
Escrow Costs: Most lenders collect property taxes and homeowners insurance premiums as part of your monthly bill, holding them in an escrow account to pay on your behalf.
Factors Affecting Your Payment
Several variables can significantly change your monthly financial obligation:
Down Payment: A larger down payment reduces the principal loan amount, lowering your monthly payment and total interest paid. If you put down less than 20%, you may also have to pay Private Mortgage Insurance (PMI), which is not included in this basic calculation.
Interest Rate: Even a small difference in rates (e.g., 0.5%) can add up to tens of thousands of dollars over the life of a 30-year loan. Rates are determined by the economy and your personal credit score.
Loan Term: A 30-year term offers lower monthly payments but results in higher total interest costs. A 15-year term has higher monthly payments but saves money in the long run.
Why Use a Mortgage Calculator?
Using a calculator allows you to stress-test your budget before speaking to a lender. By adjusting the home price and down payment inputs, you can determine exactly how much house you can afford while maintaining a comfortable monthly budget for other expenses.
function calculateMortgage() {
// Get Input Values
var price = parseFloat(document.getElementById('homePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var termYears = parseFloat(document.getElementById('loanTerm').value);
var ratePercent = parseFloat(document.getElementById('interestRate').value);
var yearlyTax = parseFloat(document.getElementById('propertyTax').value);
var yearlyIns = parseFloat(document.getElementById('insurance').value);
// Validation
if (isNaN(price) || isNaN(down) || isNaN(termYears) || isNaN(ratePercent)) {
alert("Please enter valid numbers for all fields.");
return;
}
// Core Logic
var principal = price – down;
// Handle case where down payment is greater than price
if (principal < 0) {
principal = 0;
}
// Monthly Interest Rate
var monthlyRate = ratePercent / 100 / 12;
// Total Number of Payments
var numPayments = termYears * 12;
// Calculate Monthly Principal & Interest (P&I)
var monthlyPI = 0;
if (ratePercent === 0) {
monthlyPI = principal / numPayments;
} else {
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var x = Math.pow(1 + monthlyRate, numPayments);
monthlyPI = principal * ((monthlyRate * x) / (x – 1));
}
// Calculate Escrow items
var monthlyTax = isNaN(yearlyTax) ? 0 : yearlyTax / 12;
var monthlyIns = isNaN(yearlyIns) ? 0 : yearlyIns / 12;
var totalMonthly = monthlyPI + monthlyTax + monthlyIns;
// Calculate Totals
var totalCost = monthlyPI * numPayments;
var totalInterest = totalCost – principal;
// Display Results
document.getElementById('results').style.display = 'block';
// Formatting function
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('monthlyTotal').innerText = formatter.format(totalMonthly);
document.getElementById('monthlyPI').innerText = formatter.format(monthlyPI);
document.getElementById('monthlyTax').innerText = formatter.format(monthlyTax);
document.getElementById('monthlyIns').innerText = formatter.format(monthlyIns);
document.getElementById('totalLoan').innerText = formatter.format(principal);
document.getElementById('totalInterest').innerText = formatter.format(totalInterest);
}