A mortgage is a significant financial commitment, and understanding how your loan is paid off over time is crucial. A mortgage amortization calculator helps you estimate your monthly payments, the total interest you'll pay, and the total cost of your loan based on the principal amount, interest rate, and loan term.
How the Calculation Works
The core of a mortgage calculation lies in determining the fixed monthly payment that will fully amortize (pay off) the loan over its entire term. The standard formula used is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment
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 (months). For example, a 5% annual rate becomes 0.05 / 12 = 0.0041667 monthly.
n = The total number of payments over the loan's lifetime. This is calculated by multiplying your loan term in years by 12 (months). For a 30-year mortgage, n = 30 * 12 = 360.
Key Components of the Result:
Estimated Monthly Payment: This is the fixed amount you will pay each month towards your mortgage principal and interest. Property taxes, homeowners insurance, and private mortgage insurance (PMI), if applicable, are typically added to this amount to form your actual total monthly housing expense (often called PITI: Principal, Interest, Taxes, Insurance).
Total Interest Paid: This represents the sum of all the interest payments made over the entire life of the loan. You can see how a lower interest rate or a shorter loan term can significantly reduce the total interest paid.
Total Cost of Loan: This is the sum of the original principal loan amount and the total interest paid over the term. It gives you a clear picture of the full financial commitment of taking out the mortgage.
Why Use a Mortgage Calculator?
Budgeting: Helps you determine if a particular mortgage payment fits within your monthly budget.
Affordability Assessment: Allows you to explore different loan scenarios (e.g., varying loan amounts, interest rates, or terms) to understand what you can realistically afford.
Financial Planning: Aids in long-term financial planning by showing the total cost and interest burden of a mortgage.
Comparison Tool: Useful for comparing loan offers from different lenders.
Remember, this calculator provides an estimate. Actual loan terms, fees, and lender-specific calculations may vary. It's always best to consult with a mortgage professional for precise figures and personalized advice.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPayment = 0;
var totalInterest = 0;
var totalCost = 0;
if (isNaN(principal) || principal <= 0 ||
isNaN(annualRate) || annualRate < 0 ||
isNaN(loanTermYears) || loanTermYears 0) {
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, numberOfPayments)) / (Math.pow(1 + monthlyRate, numberOfPayments) – 1);
} else {
// If interest rate is 0, payment is just principal / number of payments
monthlyPayment = principal / numberOfPayments;
}
totalCost = monthlyPayment * numberOfPayments;
totalInterest = totalCost – principal;
document.getElementById("monthlyPayment").textContent = "$" + monthlyPayment.toFixed(2);
document.getElementById("totalInterest").textContent = "$" + totalInterest.toFixed(2);
document.getElementById("totalCost").textContent = "$" + totalCost.toFixed(2);
}