Understanding how your monthly mortgage payment is calculated is crucial for budgeting and financial planning. The standard mortgage payment calculation uses a fixed-rate mortgage formula to determine the consistent amount you'll pay each month for the life of the loan. This payment typically includes both principal and interest.
The Mortgage Payment Formula
The formula used to calculate the monthly payment (M) for a fixed-rate mortgage is as follows:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal loan amount (the total amount borrowed).
i = Monthly interest rate. This is your annual interest rate divided by 12 (and then divided by 100 to convert from a percentage to a decimal). For example, an annual rate of 5% becomes 0.05 / 12.
n = Total number of payments over the loan's lifetime. This is the loan term in years multiplied by 12. For a 30-year mortgage, n = 30 * 12 = 360.
Breakdown of Calculation Steps:
Determine the Monthly Interest Rate (i): Take the annual interest rate, divide it by 100 to get the decimal form, and then divide that by 12.
Calculate the Total Number of Payments (n): Multiply the loan term in years by 12.
Apply the Formula: Plug your values for P, i, and n into the formula above.
Result: The output (M) is your estimated monthly principal and interest payment.
Important Considerations:
This calculator provides an estimate for the principal and interest (P&I) portion of your mortgage payment. Your actual total monthly housing expense will likely be higher and may include:
Property Taxes: Paid to your local government.
Homeowner's Insurance: Required by lenders to protect against damage.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price.
Homeowner Association (HOA) Fees: If applicable.
These additional costs are often collected by your lender as part of an escrow account and are paid out on your behalf. Always consult with a mortgage professional for a precise quote tailored to your specific financial situation.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPaymentDisplay = document.getElementById("monthlyPayment");
// Clear previous results or errors
monthlyPaymentDisplay.textContent = "$0.00";
// Input validation
if (isNaN(principal) || principal <= 0) {
alert("Please enter a valid loan amount.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate <= 0) {
alert("Please enter a valid annual interest rate.");
return;
}
if (isNaN(loanTermYears) || loanTermYears 0) {
monthlyPayment = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else { // Handle 0% interest rate
monthlyPayment = principal / numberOfPayments;
}
// Format the result to two decimal places and add currency symbol
monthlyPaymentDisplay.textContent = "$" + monthlyPayment.toFixed(2);
}