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Monthly Breakdown
Principal & Interest:$0.00
Property Tax:$0.00
Home Insurance:$0.00
Total Monthly Payment:$0.00
Understanding Your Mortgage Payments
Buying a home is one of the most significant financial decisions you will make. Understanding how your monthly mortgage payment is calculated is crucial for budgeting and determining affordability. Our Mortgage Payment Calculator breaks down the costs into Principal, Interest, Taxes, and Insurance (often referred to as PITI).
How the Mortgage Formula Works
The core of your mortgage payment consists of principal and interest. The standard formula used by lenders to determine this portion is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
M = Total monthly payment (Principal + Interest)
P = Principal loan amount (Home Price minus Down Payment)
i = Monthly interest rate (Annual rate divided by 12)
n = Number of months to repay the loan (Years times 12)
Components of a Monthly Payment (PITI)
While the formula above covers the loan repayment, most homeowners also pay into an escrow account for taxes and insurance. Here is the breakdown:
Principal: The money that goes towards paying down the loan balance.
Interest: The cost of borrowing the money, paid to the lender.
Taxes: Property taxes assessed by your local government, usually calculated as a percentage of the home's assessed value.
Insurance: Homeowners insurance to protect against damage and liability.
How Interest Rates Affect Your Payment
Even a small change in interest rates can significantly impact your monthly payment and the total interest paid over the life of the loan. For example, on a $300,000 loan, the difference between a 6% and a 7% interest rate can amount to roughly $200 extra per month.
Frequently Asked Questions
What is a good down payment?
Traditionally, 20% is considered the gold standard to avoid Private Mortgage Insurance (PMI). However, many loan programs allow for down payments as low as 3% or 3.5% (FHA loans), though this usually increases the monthly cost due to PMI.
Does this calculator include PMI?
This specific calculator focuses on PITI. If your down payment is less than 20%, you should budget an additional 0.5% to 1% of the loan amount annually for Private Mortgage Insurance until you reach 20% equity.
How can I lower my monthly payment?
You can lower your monthly payment by increasing your down payment, securing a lower interest rate (by improving your credit score or buying points), or extending the loan term (e.g., choosing a 30-year term over a 15-year term).
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"@type": "Question",
"name": "What is the formula for calculating mortgage payments?",
"acceptedAnswer": {
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"text": "The standard mortgage formula is M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ], where M is the monthly payment, P is the principal, i is the monthly interest rate, and n is the number of months."
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}, {
"@type": "Question",
"name": "What does PITI stand for?",
"acceptedAnswer": {
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"text": "PITI stands for Principal, Interest, Taxes, and Insurance. These are the four main components of a standard monthly mortgage payment."
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"name": "How does the loan term affect monthly payments?",
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"text": "A longer loan term, such as 30 years, spreads payments out over more time, resulting in a lower monthly payment but higher total interest costs compared to a shorter term like 15 years."
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function calculateMortgage() {
// Get input values
var homePriceInput = document.getElementById('homePrice').value;
var downPaymentInput = document.getElementById('downPayment').value;
var loanTermInput = document.getElementById('loanTerm').value;
var interestRateInput = document.getElementById('interestRate').value;
var propertyTaxInput = document.getElementById('propertyTax').value;
var homeInsuranceInput = document.getElementById('homeInsurance').value;
// Parse values
var homePrice = parseFloat(homePriceInput);
var downPayment = parseFloat(downPaymentInput);
var loanTermYears = parseFloat(loanTermInput);
var annualRate = parseFloat(interestRateInput);
var annualTax = parseFloat(propertyTaxInput);
var annualInsurance = parseFloat(homeInsuranceInput);
// Validation
if (isNaN(homePrice) || isNaN(downPayment) || isNaN(loanTermYears) || isNaN(annualRate) ||
homePrice <= 0 || loanTermYears <= 0) {
document.getElementById('errorMsg').style.display = 'block';
document.getElementById('resultsSection').style.display = 'none';
return;
} else {
document.getElementById('errorMsg').style.display = 'none';
}
// Calculate Principal Loan Amount
var principal = homePrice – downPayment;
// Handle case where down payment is greater than home price
if (principal < 0) {
principal = 0;
}
// Calculate Monthly Interest Rate and Number of Payments
var monthlyRate = (annualRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
// Calculate Monthly P&I
var monthlyPI = 0;
// If interest rate is 0, just divide principal by months
if (annualRate === 0) {
monthlyPI = principal / numberOfPayments;
} else {
// Standard Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var numerator = monthlyRate * Math.pow((1 + monthlyRate), numberOfPayments);
var denominator = Math.pow((1 + monthlyRate), numberOfPayments) – 1;
monthlyPI = principal * (numerator / denominator);
}
// Calculate Monthly Tax and Insurance
var monthlyTax = isNaN(annualTax) ? 0 : annualTax / 12;
var monthlyInsurance = isNaN(annualInsurance) ? 0 : annualInsurance / 12;
// Total Monthly Payment
var totalMonthly = monthlyPI + monthlyTax + monthlyInsurance;
// Format and Display Results
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resultPI').innerHTML = formatter.format(monthlyPI);
document.getElementById('resultTax').innerHTML = formatter.format(monthlyTax);
document.getElementById('resultInsurance').innerHTML = formatter.format(monthlyInsurance);
document.getElementById('resultTotal').innerHTML = formatter.format(totalMonthly);
// Show Results
document.getElementById('resultsSection').style.display = 'block';
}