Calculating your monthly mortgage payment is crucial for budgeting and understanding your long-term financial commitment. The principal and interest (P&I) portion of your payment is determined by a standard formula that takes into account the loan amount, interest rate, and loan term.
The Mortgage Payment Formula
The most common formula used to calculate the principal and interest portion of a mortgage payment is the annuity formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (principal and interest)
P = The principal loan amount (the total amount you borrow)
i = Your monthly interest rate. This is your annual interest rate divided by 12. (e.g., if your annual rate is 6%, your monthly rate is 0.06 / 12 = 0.005)
n = The total number of payments over the loan's lifetime. This is your loan term in years multiplied by 12. (e.g., for a 30-year mortgage, n = 30 * 12 = 360)
How the Calculator Works
Our calculator uses this exact formula. When you input:
Loan Amount: The total sum you are borrowing.
Annual Interest Rate: The yearly percentage charged by the lender.
Loan Term (Years): The total duration of the loan in years.
The calculator first converts the annual interest rate to a monthly rate and the loan term in years to the total number of monthly payments. It then plugs these values into the formula to compute your estimated monthly principal and interest payment.
Important Considerations:
Keep in mind that this calculation typically only covers the Principal and Interest (P&I). Your actual total monthly housing expense will likely be higher because it usually includes:
Property Taxes: Paid to your local government.
Homeowner's Insurance: Required by lenders to protect against damage.
Private Mortgage Insurance (PMI): Often required if your down payment is less than 20%.
Homeowners Association (HOA) Fees: If applicable in your neighborhood.
These additional costs are often bundled into your monthly payment through an escrow account managed by your lender. Always ask for a detailed breakdown of your estimated monthly housing costs (often called a Loan Estimate) when obtaining mortgage quotes.
Use Cases:
Budgeting: Estimate how much house you can afford.
Comparison: Compare offers from different lenders.
Financial Planning: Understand the long-term cost of borrowing.
function calculateMortgagePayment() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var years = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPaymentElement = document.getElementById("monthlyPayment");
// Clear previous result if inputs are invalid
monthlyPaymentElement.textContent = "$0.00";
// Validate inputs
if (isNaN(principal) || principal <= 0) {
alert("Please enter a valid loan amount.");
return;
}
if (isNaN(annualRate) || annualRate < 0) {
alert("Please enter a valid annual interest rate.");
return;
}
if (isNaN(years) || years <= 0) {
alert("Please enter a valid loan term in years.");
return;
}
// Calculate monthly interest rate
var monthlyRate = (annualRate / 100) / 12;
// Calculate the total number of payments
var numberOfPayments = years * 12;
var monthlyPayment = 0;
// Handle the case where the interest rate is 0%
if (monthlyRate === 0) {
monthlyPayment = principal / numberOfPayments;
} else {
// Calculate monthly payment using the formula
var numerator = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments));
var denominator = Math.pow(1 + monthlyRate, numberOfPayments) – 1;
monthlyPayment = numerator / denominator;
}
// Format the result to two decimal places
monthlyPaymentElement.textContent = "$" + monthlyPayment.toFixed(2);
}