A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial for budgeting and financial planning. This basic mortgage calculator helps you estimate your principal and interest payment.
How the Calculation Works
The monthly mortgage payment is calculated using the following formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (principal and 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. For example, if your annual rate is 5%, your monthly rate is 5% / 12 = 0.00416667.
n = The total number of payments over the loan's lifetime. This is calculated by multiplying your loan term in years by 12. For example, a 30-year mortgage has 30 * 12 = 360 payments.
Example Calculation
Let's say you want to buy a house and need a mortgage with the following terms:
Loan Amount (P): $250,000
Annual Interest Rate: 6.5%
Loan Term: 30 years
First, we convert the annual interest rate to a monthly interest rate (i):
i = 6.5% / 12 = 0.065 / 12 ≈ 0.00541667
Next, we calculate the total number of payments (n):
Calculating this yields an estimated monthly payment (M) of approximately $1,580.43.
Important Considerations
This calculator provides an estimate for the principal and interest portion of your mortgage payment only. It does not include other costs you'll typically pay, such as:
Property Taxes
Homeowner's Insurance
Private Mortgage Insurance (PMI) if your down payment is less than 20%
Homeowners Association (HOA) fees
These additional costs, often referred to as PITI (Principal, Interest, Taxes, and Insurance), can significantly increase your total monthly housing expense. Always consult with a mortgage professional for a precise quote tailored to your specific situation.
function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTerm = parseFloat(document.getElementById("loanTerm").value);
var monthlyPayment = 0;
if (isNaN(loanAmount) || loanAmount <= 0) {
alert("Please enter a valid loan amount.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate <= 0) {
alert("Please enter a valid annual interest rate.");
return;
}
if (isNaN(loanTerm) || loanTerm 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// If interest rate is 0, payment is just principal divided by number of payments
monthlyPayment = loanAmount / numberOfPayments;
}
document.getElementById("monthlyPayment").innerText = "$" + monthlyPayment.toFixed(2);
}