Purchasing a home is one of the most significant financial decisions you will make. Using a reliable Mortgage Calculator helps you estimate your monthly obligations and plan your budget effectively. This tool breaks down the Principal, Interest, Taxes, and Insurance (often referred to as PITI) to give you a comprehensive view of your housing costs.
How the Formula Works
The core of the mortgage calculation uses the standard amortization formula to determine the monthly principal and interest payment:
Principal (P): The loan amount, calculated as the Home Price minus the Down Payment.
Interest Rate (r): The annual interest rate divided by 12 (monthly rate).
Number of Payments (n): The loan term in years multiplied by 12.
Additionally, real-world mortgage payments often include escrow items like Property Taxes and Homeowners Insurance, which are divided by 12 and added to your monthly principal and interest payment.
Factors That Impact Your Monthly Payment
Several variables can significantly alter your monthly financial commitment:
Down Payment: A larger down payment reduces your loan principal, resulting in lower monthly payments and less interest paid over the life of the loan.
Interest Rate: Even a fraction of a percentage point can change your monthly payment by hundreds of dollars. Rates are influenced by your credit score and current market conditions.
Loan Term: A 30-year term offers lower monthly payments but results in higher total interest costs compared to a 15-year term.
Why Accurate Calculation Matters
Many homebuyers focus solely on the sticker price of the house, neglecting the ongoing costs of taxes and insurance. By inputting accurate estimates for property taxes and insurance into this calculator, you avoid "payment shock" and ensure your dream home fits comfortably within your monthly budget.
function calculateMortgage() {
// 1. Get Input Values
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var propertyTax = parseFloat(document.getElementById("propertyTax").value);
var homeInsurance = parseFloat(document.getElementById("homeInsurance").value);
// 2. Input Validation
if (isNaN(homePrice) || isNaN(downPayment) || isNaN(interestRate) || isNaN(loanTerm) || isNaN(propertyTax) || isNaN(homeInsurance)) {
alert("Please enter valid numbers in all fields.");
return;
}
if (downPayment >= homePrice) {
alert("Down payment cannot be equal to or greater than the home price.");
return;
}
// 3. Calculation Logic
var loanAmount = homePrice – downPayment;
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
// Amortization Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyPrincipalInterest = 0;
if (interestRate === 0) {
monthlyPrincipalInterest = loanAmount / numberOfPayments;
} else {
monthlyPrincipalInterest = loanAmount *
(monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) /
(Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
// Calculate Escrow items (Tax and Insurance monthly)
var monthlyTax = propertyTax / 12;
var monthlyInsurance = homeInsurance / 12;
var totalMonthlyPayment = monthlyPrincipalInterest + monthlyTax + monthlyInsurance;
var totalCostOfLoan = (monthlyPrincipalInterest * numberOfPayments);
var totalInterest = totalCostOfLoan – loanAmount;
// 4. Formatting Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
// 5. Update UI
document.getElementById("totalMonthlyPayment").innerHTML = formatter.format(totalMonthlyPayment);
document.getElementById("principalInterest").innerHTML = formatter.format(monthlyPrincipalInterest);
document.getElementById("totalInterest").innerHTML = formatter.format(totalInterest);
// Show result box
document.getElementById("result").style.display = "block";
}