Understanding Your Monthly Mortgage Payment (PITI)
When calculating how much home you can afford, it is crucial to look beyond just the sticker price of the house. Most mortgage payments are comprised of four primary components, commonly referred to by the acronym PITI:
- Principal: The portion of your payment that reduces the loan balance.
- Interest: The cost of borrowing money from your lender.
- Taxes: Real estate property taxes assessed by your local government.
- Insurance: Homeowners insurance to protect the property against hazards.
How Interest Rates Affect Your Buying Power
Even a small change in interest rates can significantly impact your monthly obligation. For example, on a $300,000 loan, the difference between a 6.0% and a 7.0% interest rate is roughly $200 per month. Over the life of a 30-year loan, this equates to over $70,000 in additional interest costs.
Estimating Property Taxes and Insurance
While Principal and Interest are fixed (on a fixed-rate mortgage), taxes and insurance are variable costs that can rise over time. The national average for property tax is approximately 1.1% of the assessed home value, but this varies wildly by state. When using this calculator, check your local county assessor's website for the most accurate tax rate to ensure your budget is realistic.
The Role of HOA Fees
If you are buying a condominium or a home in a planned community, do not forget to include Homeowners Association (HOA) fees. While these fees generally cover common area maintenance and amenities, they are a mandatory monthly cost that reduces the amount of mortgage loan you can qualify for.
function calculateMortgage() {
// 1. Get Input Values
var price = parseFloat(document.getElementById('homePrice').value);
var down = parseFloat(document.getElementById('downPayment').value);
var rate = parseFloat(document.getElementById('interestRate').value);
var term = parseInt(document.getElementById('loanTerm').value);
var taxYearly = parseFloat(document.getElementById('propertyTax').value);
var insYearly = parseFloat(document.getElementById('homeInsurance').value);
var hoa = parseFloat(document.getElementById('hoaFees').value);
var errorBox = document.getElementById('error-box');
// 2. Validation
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(term) || isNaN(taxYearly) || isNaN(insYearly)) {
errorBox.style.display = 'block';
return;
}
// Handle optional HOA if empty
if (isNaN(hoa)) { hoa = 0; }
// Validate logical numbers
if (price <= 0 || rate < 0 || term Price
if (loanAmount 0) {
if (rate === 0) {
monthlyPI = loanAmount / numPayments;
} else {
// Standard Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
monthlyPI = loanAmount * ( (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) / (Math.pow(1 + monthlyRate, numPayments) – 1) );
}
}
// Monthly Tax and Insurance
var monthlyTax = taxYearly / 12;
var monthlyIns = insYearly / 12;
// Total Monthly Payment
var totalMonthly = monthlyPI + monthlyTax + monthlyIns + hoa;
// Total Interest over life of loan
var totalPaymentOverLife = (monthlyPI * numPayments);
var totalInterest = totalPaymentOverLife – loanAmount;
// 4. Update UI
// Helper for formatting currency
var fmt = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' });
document.getElementById('res-pi').textContent = fmt.format(monthlyPI);
document.getElementById('res-tax').textContent = fmt.format(monthlyTax);
document.getElementById('res-ins').textContent = fmt.format(monthlyIns);
document.getElementById('res-hoa').textContent = fmt.format(hoa);
document.getElementById('res-total').textContent = fmt.format(totalMonthly);
document.getElementById('res-loan-amount').textContent = fmt.format(loanAmount);
document.getElementById('res-total-interest').textContent = fmt.format(totalInterest);
}