When you take out a mortgage, the advertised interest rate is just one piece of the puzzle. The total cost of your mortgage over its lifetime includes not only the principal and interest payments but also various other expenses like property taxes, homeowner's insurance, and potentially Private Mortgage Insurance (PMI). This Mortgage Total Cost Calculator helps you estimate the overall financial commitment you're making, providing a clearer picture beyond just the monthly principal and interest payment.
How the Calculation Works:
This calculator breaks down the total cost into several key components:
Principal and Interest (P&I): This is the core of your mortgage payment. It's calculated using the standard mortgage payment formula, which amortizes the loan over its term at the specified interest rate. The formula for the monthly payment (M) is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
The total paid in P&I over the loan term is M * n.
Property Taxes: Your annual property tax is divided by 12 to get a monthly estimate. These are typically paid into an escrow account managed by your lender.
Homeowner's Insurance: Similar to property taxes, the annual premium is divided by 12 for a monthly estimate. This is also usually handled through escrow.
Private Mortgage Insurance (PMI): If your down payment was less than 20% of the home's value, you might be required to pay PMI. This protects the lender. The annual cost (if applicable) is divided by 12.
The calculator sums up the total P&I paid over the loan's life, plus the total property taxes, homeowner's insurance, and PMI paid over the same period to arrive at the Total Mortgage Cost.
Why This Matters:
Understanding the total cost of your mortgage is crucial for several reasons:
Budgeting: It allows for more accurate long-term financial planning and budgeting, accounting for all associated housing expenses.
Comparison Shopping: When comparing different loan offers, looking beyond just the interest rate and considering the total estimated cost can reveal significant differences in overall expense.
Financial Health: It provides a realistic view of your long-term financial commitment, helping you ensure the mortgage is sustainable for your financial situation.
Use this calculator to gain a comprehensive understanding of your mortgage financial obligations.
function calculateTotalCost() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var propertyTaxAnnual = parseFloat(document.getElementById("propertyTaxAnnual").value);
var homeInsuranceAnnual = parseFloat(document.getElementById("homeInsuranceAnnual").value);
var pmiAnnual = parseFloat(document.getElementById("pmiAnnual").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
if (isNaN(loanAmount) || isNaN(interestRate) || isNaN(loanTermYears) ||
isNaN(propertyTaxAnnual) || isNaN(homeInsuranceAnnual) || isNaN(pmiAnnual) ||
loanAmount <= 0 || interestRate < 0 || loanTermYears 0) {
principalAndInterestPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
totalPrincipalAndInterest = principalAndInterestPayment * numberOfPayments;
} else {
// If interest rate is 0, P&I is just loan amount divided by number of payments
principalAndInterestPayment = loanAmount / numberOfPayments;
totalPrincipalAndInterest = loanAmount;
}
// Calculate total taxes, insurance, and PMI over the loan term
var totalPropertyTax = propertyTaxAnnual * loanTermYears;
var totalHomeInsurance = homeInsuranceAnnual * loanTermYears;
var totalPmi = pmiAnnual * loanTermYears;
// Calculate total mortgage cost
var totalMortgageCost = totalPrincipalAndInterest + totalPropertyTax + totalHomeInsurance + totalPmi;
// Format currency for better readability
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2,
maximumFractionDigits: 2,
});
resultDiv.innerHTML = "Total Estimated Mortgage Cost: " + formatter.format(totalMortgageCost) +
"(" + formatter.format(totalPrincipalAndInterest) + " P&I + " +
formatter.format(totalPropertyTax) + " Taxes + " +
formatter.format(totalHomeInsurance) + " Insurance + " +
formatter.format(totalPmi) + " PMI)";
}