Buying a home is likely the largest financial commitment you will make in your lifetime. Using a mortgage calculator is an essential first step in the home-buying process. It helps you estimate your monthly housing costs based on the home's price, your down payment, the loan term, and the current interest rate.
How the Formula Works
A standard mortgage calculation determines your monthly principal and interest payment. This is often referred to as the amortization calculation. The formula takes into account the total amount borrowed (principal) and spreads the repayment over the life of the loan (term) while applying the annual interest rate.
Keep in mind that this calculator provides an estimate for Principal and Interest (P&I) only. A complete monthly housing payment often includes additional costs such as:
Property Taxes: Levied by your local government, typically based on the assessed value of the property.
Homeowners Insurance: Protects your home against damage and theft.
Private Mortgage Insurance (PMI): Usually required if your down payment is less than 20% of the home's purchase price.
HOA Fees: Monthly dues if the property is part of a Homeowners Association.
Factors Affecting Your Monthly Payment
Several variables can significantly impact how much you pay each month:
Loan Term: A 30-year term typically offers lower monthly payments compared to a 15-year term, but you will pay significantly more in interest over the life of the loan.
Interest Rate: Even a small difference in percentage (e.g., 0.5%) can add up to tens of thousands of dollars in extra interest over 30 years. Your credit score greatly influences the rate lenders offer you.
Down Payment: Putting more money down reduces the principal amount you need to borrow, which lowers your monthly payment and total interest costs.
Using the Results
Once you calculate your estimated payment, compare it to your monthly budget. Financial experts generally recommend that your total housing costs should not exceed 28% of your gross monthly income. Use these figures to determine a comfortable price range before you start shopping for homes.
function calculateMortgage() {
// Get input values
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
// Validation
if (isNaN(homePrice) || isNaN(downPayment) || isNaN(loanTerm) || isNaN(interestRate)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (downPayment > homePrice) {
alert("Down payment cannot be greater than the home price.");
return;
}
// Calculations
var principal = homePrice – downPayment;
var monthlyRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyPayment = 0;
// Handle edge case where interest rate is 0
if (interestRate === 0) {
monthlyPayment = principal / numberOfPayments;
} else {
// Standard Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var mathPower = Math.pow(1 + monthlyRate, numberOfPayments);
monthlyPayment = principal * ((monthlyRate * mathPower) / (mathPower – 1));
}
var totalCost = monthlyPayment * numberOfPayments;
var totalInterest = totalCost – principal;
// Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById("monthlyPayment").innerText = formatter.format(monthlyPayment);
document.getElementById("displayPrincipal").innerText = formatter.format(principal);
document.getElementById("totalInterest").innerText = formatter.format(totalInterest);
document.getElementById("totalCost").innerText = formatter.format(totalCost);
// Show the results section
document.getElementById("results").style.display = "block";
}