How Interest Rate is Calculated

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Mortgage Payment Calculator

30 Years 20 Years 15 Years 10 Years
Total Monthly Payment
Principal & Interest:
Property Tax (Monthly):
Home Insurance (Monthly):
HOA Fees:
Total Amount Repaid:
Total Interest Paid:

How This Mortgage Calculator Works

Purchasing a home is one of the most significant financial decisions you will make. This Mortgage Calculator is designed to provide you with a comprehensive breakdown of your potential monthly payments. Unlike simple calculators that only look at principal and interest, this tool incorporates property taxes, homeowner's insurance, and HOA fees to give you a realistic "out-of-pocket" monthly cost estimate, often referred to as PITI.

Understanding the Components of Your Mortgage

Your monthly mortgage payment is typically composed of four main parts:

  • Principal: The portion of the payment that reduces the remaining balance of your loan. In the early years of a mortgage, this amount is small but grows over time.
  • Interest: The cost of borrowing money from your lender. This is calculated based on your annual interest rate and the remaining loan balance.
  • Taxes: Property taxes assessed by your local government. These are usually divided by 12 and collected monthly by your lender into an escrow account.
  • Insurance: Homeowners insurance protects your property against damage. Like taxes, the yearly premium is often split into monthly payments.

Factors That Impact Your Monthly Payment

Several variables can drastically change how much you pay every month:

  • Loan Term: A 30-year term offers lower monthly payments but results in significantly more interest paid over the life of the loan compared to a 15-year term.
  • Down Payment: Putting more money down reduces the principal loan amount, which lowers your monthly payment and reduces total interest costs.
  • Interest Rate: Even a fraction of a percentage point difference can save or cost you tens of thousands of dollars over the lifespan of a mortgage.

Why Calculate PITI?

Many first-time homebuyers are shocked when their actual bill arrives because they only calculated the loan repayment (Principal + Interest). By factoring in Taxes, Insurance, and HOA fees (PITI), you can determine if a property truly fits within your monthly budget. Lenders use these figures to calculate your Debt-to-Income (DTI) ratio, a crucial metric in approving your loan application.

function calculateMortgage() { // 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 propertyTaxYearly = parseFloat(document.getElementById('propertyTax').value); var homeInsuranceYearly = parseFloat(document.getElementById('homeInsurance').value); var hoaFeesMonthly = parseFloat(document.getElementById('hoaFees').value); // Validation if (isNaN(homePrice) || homePrice <= 0) { alert("Please enter a valid Home Price."); return; } if (isNaN(downPayment) || downPayment < 0) { downPayment = 0; } if (isNaN(interestRate) || interestRate < 0) { alert("Please enter a valid Interest Rate."); return; } if (isNaN(propertyTaxYearly)) propertyTaxYearly = 0; if (isNaN(homeInsuranceYearly)) homeInsuranceYearly = 0; if (isNaN(hoaFeesMonthly)) hoaFeesMonthly = 0; // Core Calculation var principal = homePrice – downPayment; var monthlyInterestRate = (interestRate / 100) / 12; var numberOfPayments = loanTerm * 12; var monthlyPI = 0; // Handle 0% interest case if (interestRate === 0) { monthlyPI = principal / numberOfPayments; } else { // Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ] monthlyPI = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1); } var monthlyTax = propertyTaxYearly / 12; var monthlyInsurance = homeInsuranceYearly / 12; var totalMonthlyPayment = monthlyPI + monthlyTax + monthlyInsurance + hoaFeesMonthly; var totalRepayment = (monthlyPI * numberOfPayments) + (monthlyTax * numberOfPayments) + (monthlyInsurance * numberOfPayments) + (hoaFeesMonthly * numberOfPayments); var totalPrincipalAndInterest = monthlyPI * numberOfPayments; var totalInterest = totalPrincipalAndInterest – principal; // Update DOM var formatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 2 }); document.getElementById('totalMonthly').innerHTML = formatter.format(totalMonthlyPayment); document.getElementById('piMonthly').innerHTML = formatter.format(monthlyPI); document.getElementById('taxMonthly').innerHTML = formatter.format(monthlyTax); document.getElementById('insMonthly').innerHTML = formatter.format(monthlyInsurance); document.getElementById('hoaResult').innerHTML = formatter.format(hoaFeesMonthly); document.getElementById('totalRepaid').innerHTML = formatter.format(totalPrincipalAndInterest); // Focusing on loan repayment document.getElementById('totalInterest').innerHTML = formatter.format(totalInterest); // Show Results Area document.getElementById('resultsArea').style.display = 'block'; }

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