Purchasing a home is one of the largest financial commitments most people make. A crucial part of this process is understanding your mortgage, often referred to as a house loan. The monthly payment you make on a house loan is determined by several key factors: the loan amount, the annual interest rate, and the loan term (the number of years you have to repay the loan). This calculator helps you estimate your principal and interest (P&I) payment, which is a core component of your total housing expense.
The Math Behind the Mortgage Payment
The standard formula used to calculate the fixed monthly payment (M) for a mortgage is as follows:
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 amount you borrow).
i = Your monthly interest rate. This is your annual interest rate divided by 12. For example, a 6% annual rate is 0.06 / 12 = 0.005 per month.
n = The total number of payments over the loan's lifetime. This is the loan term in years multiplied by 12. For a 30-year loan, n = 30 * 12 = 360 payments.
How to Use This Calculator:
Loan Amount: Enter the total amount you intend to borrow for the house. This is usually the purchase price minus your down payment.
Annual Interest Rate: Input the yearly interest rate you expect to pay on the loan. This rate significantly impacts your monthly payment and the total interest paid over time. Use the slider or input box for precision.
Loan Term (Years): Select the duration of the loan. Common terms in the U.S. are 15 and 30 years. A shorter term means higher monthly payments but less total interest paid. A longer term means lower monthly payments but more interest paid overall.
Understanding the Results:
Monthly Payment (P&I): This is the calculated amount you'll pay each month solely for the principal and interest on your loan. It does not include other costs like property taxes, homeowners insurance, or Private Mortgage Insurance (PMI), which are often bundled into an escrow payment.
Total Interest Paid: This figure shows the cumulative interest you will pay over the entire life of the loan.
Total Loan Cost: This is the sum of the principal loan amount and all the interest paid over the loan's term.
Important Considerations:
This calculator provides an estimate for principal and interest only. Your actual total monthly housing payment (often called PITI) will likely be higher. PITI stands for:
Principal
Interest
Taxes (Property Taxes)
Insurance (Homeowners Insurance)
Many lenders require you to pay property taxes and homeowners insurance as part of your monthly mortgage payment. They hold this money in an escrow account and pay the bills on your behalf when they are due. If your loan-to-value ratio is below 80%, you may also need to pay Private Mortgage Insurance (PMI), which protects the lender if you default on the loan.
Use this calculator as a starting point for your home financing research. Consulting with a mortgage professional is highly recommended to get accurate quotes and understand all aspects of your specific loan options.
function calculateLoan() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseInt(document.getElementById("loanTerm").value);
var monthlyPayment = 0;
var totalInterestPaid = 0;
var totalLoanCost = 0;
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || loanAmount <= 0 || annualInterestRate < 0 || loanTermYears 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle the case of 0% interest rate
monthlyPayment = loanAmount / numberOfPayments;
}
// Calculate total loan cost and total interest paid
totalLoanCost = monthlyPayment * numberOfPayments;
totalInterestPaid = totalLoanCost – loanAmount;
// Display the results, formatted as currency and integers
document.getElementById("monthlyPayment").innerText = "$" + monthlyPayment.toFixed(2);
document.getElementById("totalInterestPaid").innerText = "Total Interest Paid: $" + totalInterestPaid.toFixed(2);
document.getElementById("totalLoanCost").innerText = "Total Loan Cost: $" + totalLoanCost.toFixed(2);
}
// Initial calculation on page load
window.onload = function() {
calculateLoan();
};