Purchasing a home is a significant financial decision, and understanding your mortgage payment is crucial. This calculator helps estimate your monthly principal and interest payment based on the loan amount, interest rate, and loan term.
How the Calculation Works
The standard formula used for calculating monthly mortgage payments (P&I – Principal and Interest) is an amortization formula:
$M = P \frac{i(1+i)^n}{(1+i)^n – 1}$
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount (the amount you borrow)
i = Your monthly interest rate. This is calculated by dividing your annual interest rate by 12 (e.g., if your annual rate is 4.5%, then $i = 0.045 / 12 = 0.00375$).
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the number of years in your loan term by 12 (e.g., for a 30-year loan, $n = 30 \times 12 = 360$).
This formula allows lenders to determine a fixed monthly payment that will gradually pay down your principal balance while also covering the interest owed over the life of the loan.
Key Inputs Explained
Loan Amount: This is the total amount of money you are borrowing to purchase your home. It's typically the home's purchase price minus your down payment.
Annual Interest Rate: This is the yearly rate charged by the lender for borrowing the money. It's often expressed as a percentage and is a significant factor in your monthly payment. Lower rates mean lower payments.
Loan Term (Years): This is the duration over which you agree to repay the loan. Common terms for home mortgages are 15 years and 30 years. A shorter term means higher monthly payments but less total interest paid over time. A longer term means lower monthly payments but more total interest paid.
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 include:
Property Taxes: Taxes levied by your local government on the value of your property.
Homeowners Insurance: Insurance that protects your home against damage or loss.
Private Mortgage Insurance (PMI): Often required if your down payment is less than 20% of the home's purchase price.
Homeowners Association (HOA) Fees: If applicable, for the maintenance of common areas in certain communities.
It's always recommended to consult with a mortgage professional or financial advisor for a comprehensive understanding of your borrowing capacity and the total costs associated with homeownership.
function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var resultDisplay = document.getElementById("result").querySelector("span");
// Validate inputs
if (isNaN(loanAmount) || loanAmount <= 0) {
resultDisplay.textContent = "Please enter a valid loan amount.";
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
resultDisplay.textContent = "Please enter a valid annual interest rate.";
return;
}
if (isNaN(loanTerm) || loanTerm 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// If interest rate is 0, payment is just principal divided by number of payments
monthlyPayment = loanAmount / numberOfPayments;
}
resultDisplay.textContent = "$" + monthlyPayment.toFixed(2);
}