function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var resultDiv = document.getElementById("mortgage-result");
resultDiv.innerHTML = ""; // Clear previous results
resultDiv.className = "error"; // Reset class
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTerm) || loanAmount < 0 || annualInterestRate < 0 || loanTerm <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTerm * 12;
var monthlyPayment = 0;
if (monthlyInterestRate === 0) {
monthlyPayment = loanAmount / numberOfPayments;
} else {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
}
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultDiv.innerHTML = "Calculation resulted in an invalid number. Please check your inputs.";
} else {
resultDiv.innerHTML = "Your estimated monthly mortgage payment is: $" + monthlyPayment.toFixed(2);
resultDiv.className = ""; // Remove error class if calculation is successful
}
}
Understanding Your Mortgage Payment
A mortgage is a significant financial commitment, typically a long-term loan used to purchase real estate. Understanding how your monthly mortgage payment is calculated is crucial for budgeting and financial planning. The principal and interest (P&I) portion of your payment is determined by three key factors: the loan amount, the annual interest rate, and the loan term (the number of years you have to repay the loan).
The formula used to calculate the principal and interest payment is a standard loan amortization formula. It takes into account the compounding nature of interest. Even a small change in the interest rate or loan term can have a substantial impact on your total payment over the life of the loan. For example, a 0.5% increase in interest rate on a $300,000 loan over 30 years can add tens of thousands of dollars to the total cost of the mortgage.
It's important to remember that your total monthly housing expense often includes more than just the principal and interest. It may also include property taxes, homeowner's insurance (often called "escrow" if collected by the lender), and potentially private mortgage insurance (PMI) if your down payment was less than 20%. This calculator focuses solely on the principal and interest portion to give you a clear understanding of that core component of your mortgage payment.
How the Calculator Works:
Loan Amount: This is the total amount of money you are borrowing to purchase your home.
Annual Interest Rate: This is the yearly rate of interest charged by the lender. It's expressed as a percentage. The calculator converts this to a monthly rate for the calculation.
Loan Term (Years): This is the total duration of the loan, usually expressed in years (e.g., 15, 20, 30 years). The calculator converts this to the total number of monthly payments.
By inputting these figures, the calculator uses the following formula to estimate your monthly principal and interest payment:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount
i = Your monthly interest rate (annual rate divided by 12)
n = The total number of monthly payments over the loan's lifetime (loan term in years multiplied by 12)
Use this calculator to get a quick estimate and better understand the financial implications of your mortgage decision.
Example Calculation:
Let's say you are looking to buy a home and have secured a mortgage with the following terms:
Loan Amount: $250,000
Annual Interest Rate: 5.5%
Loan Term: 30 Years
Using the calculator with these inputs would yield an estimated monthly payment of approximately $1,419.34 for principal and interest. This illustrates how these figures combine to form your core mortgage expense.