You save $0.00 in interest and pay off 0 years early!
Understanding Your Mortgage Calculation
When planning to purchase a home, understanding your monthly financial commitment is crucial. This Mortgage Calculator goes beyond simple arithmetic to show you exactly how your loan amortizes over time and how principal and interest interact.
The calculation typically involves three primary factors:
Principal (Loan Amount): The total amount of money borrowed to purchase the home, minus your down payment.
Interest Rate: The annual percentage rate charged by the lender. Even a fractional difference (e.g., 6.0% vs 6.5%) can alter your monthly payment by hundreds of dollars.
Loan Term: The lifespan of the loan, typically 15 or 30 years. Shorter terms usually have lower interest rates but higher monthly payments.
The Power of Extra Payments
One of the most effective strategies to build equity faster is making extra principal payments. By adding even a small amount (like $100) to your monthly payment, you directly reduce the principal balance. This reduction lowers the amount of interest calculated for the next month, creating a snowball effect.
As shown in the "Savings" section of our calculator, consistent extra payments can slice years off your mortgage term and save you tens of thousands of dollars in total interest paid.
How the Amortization Formula Works
Mortgages use an amortization formula to ensure your payment remains constant, even though the composition changes. In the early years, the majority of your payment goes toward interest. As the principal decreases, the interest portion shrinks, and more of your payment goes toward equity.
Formula Used: 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 total number of payments.
function calculateMortgage() {
// 1. Get Elements
var amountInput = document.getElementById('mortgage_amount');
var rateInput = document.getElementById('mortgage_rate');
var termInput = document.getElementById('mortgage_term');
var extraInput = document.getElementById('mortgage_extra');
var resultContainer = document.getElementById('result_container');
var errorDisplay = document.getElementById('error_display');
var savingsSection = document.getElementById('savings_section');
// 2. Parse Values
var P = parseFloat(amountInput.value);
var annualRate = parseFloat(rateInput.value);
var years = parseFloat(termInput.value);
var extraPayment = parseFloat(extraInput.value);
// Handle empty extra payment
if (isNaN(extraPayment)) {
extraPayment = 0;
}
// 3. Validation
if (isNaN(P) || isNaN(annualRate) || isNaN(years) || P <= 0 || annualRate < 0 || years 0) {
// Calculate interest for this month
var interestForMonth = currentBalance * monthlyRate;
// Total payment this month
var paymentForMonth = baseMonthlyPayment + extraPayment;
// Principal applied
var principalForMonth = paymentForMonth – interestForMonth;
// Check if this is the last payment
if (principalForMonth > currentBalance) {
// Adjust last payment
principalForMonth = currentBalance;
interestForMonth = currentBalance * monthlyRate; // approximate for simplicity or keep standard
// Actually, logic is: Pay balance + interest
}
totalInterestWithExtra += interestForMonth;
currentBalance -= principalForMonth;
actualMonths++;
// Safety break for infinite loops (though math shouldn't allow it if payment > interest)
if (actualMonths > 1000) break;
}
// 7. Savings Logic
var interestSaved = totalInterestStandard – totalInterestWithExtra;
var monthsSaved = totalMonths – actualMonths;
var yearsSaved = (monthsSaved / 12).toFixed(1);
// 8. Determine Payoff Date
var today = new Date();
today.setMonth(today.getMonth() + actualMonths);
var payoffMonth = today.toLocaleString('default', { month: 'long' });
var payoffYear = today.getFullYear();
var payoffDateString = payoffMonth + " " + payoffYear;
// 9. Update UI
resultContainer.style.display = 'block';
document.getElementById('display_monthly_payment').innerText =
"$" + baseMonthlyPayment.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('display_total_interest').innerText =
"$" + totalInterestWithExtra.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('display_total_cost').innerText =
"$" + (P + totalInterestWithExtra).toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('display_payoff_date').innerText = payoffDateString;
// Show/Hide Savings
if (extraPayment > 0 && interestSaved > 0) {
savingsSection.style.display = 'block';
document.getElementById('display_savings').innerText = "$" + interestSaved.toLocaleString(undefined, {minimumFractionDigits: 0, maximumFractionDigits: 0});
document.getElementById('display_years_saved').innerText = yearsSaved;
} else {
savingsSection.style.display = 'none';
}
}