A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial for budgeting and financial planning. This calculator helps you estimate your principal and interest payment, the total interest you'll pay over the life of the loan, and the total amount you'll repay.
The Math Behind the Mortgage Payment
The standard formula used to calculate the monthly payment (M) for a mortgage is based on the principal loan amount (P), the monthly interest rate (r), and the total number of payments (n).
The formula is:
M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1]
n = Total Number of Payments (Loan Term in Years * 12)
The calculator first converts the annual interest rate into a monthly rate by dividing by 12 and then by 100 (to convert percentage to decimal). It then calculates the total number of payments by multiplying the loan term in years by 12. Finally, it plugs these values into the formula above to determine the estimated monthly principal and interest payment.
The total interest paid is calculated by subtracting the original loan amount from the total amount repaid over the loan term (Monthly Payment * Total Number of Payments).
Key Terms Explained:
Loan Amount (Principal): This is the total amount of money you are borrowing from the lender to purchase your home.
Annual Interest Rate: This is the yearly percentage charged by the lender for borrowing the money. Your actual monthly payment is based on a portion of this rate applied each month.
Loan Term: This is the total duration over which you will repay the loan, typically expressed in years (e.g., 15, 20, or 30 years).
Monthly Payment: This is the fixed amount you pay each month to your lender. It includes both principal (repayment of the loan amount) and interest. Note that this calculator estimates only the principal and interest; it does not include property taxes, homeowner's insurance, or private mortgage insurance (PMI), which are often bundled into an actual mortgage payment (known as PITI).
Total Interest Paid: This is the sum of all interest payments made over the entire life of the loan. Often, a significant portion of your early payments goes towards interest.
Total Amount Paid: This is the sum of the principal loan amount and all the interest paid over the loan term.
Why Use a Mortgage Calculator?
A mortgage calculator is an invaluable tool for:
Budgeting: Estimate how much you can afford for a monthly mortgage payment.
Comparing Offers: See how different interest rates or loan terms from various lenders would affect your payments.
Financial Planning: Understand the long-term cost of borrowing and the total amount you'll repay.
Affordability Assessment: Determine if a particular house price fits within your budget considering loan terms and interest rates.
Use this calculator to explore different scenarios and make informed decisions about your homeownership journey.
function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTermYears").value);
var monthlyPaymentResult = document.getElementById("monthlyPaymentResult");
var totalInterestResult = document.getElementById("totalInterestResult");
var totalPaymentResult = document.getElementById("totalPaymentResult");
// Clear previous results
monthlyPaymentResult.textContent = "$0.00";
totalInterestResult.textContent = "$0.00";
totalPaymentResult.textContent = "$0.00";
// Input validation
if (isNaN(loanAmount) || loanAmount <= 0) {
alert("Please enter a valid Loan Amount greater than zero.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
alert("Please enter a valid Annual Interest Rate (0 or greater).");
return;
}
if (isNaN(loanTermYears) || loanTermYears 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle 0% interest rate case
monthlyPayment = loanAmount / numberOfPayments;
}
var totalPayment = monthlyPayment * numberOfPayments;
var totalInterest = totalPayment – loanAmount;
// Format results to 2 decimal places and add currency symbol
monthlyPaymentResult.textContent = "$" + monthlyPayment.toFixed(2);
totalInterestResult.textContent = "$" + totalInterest.toFixed(2);
totalPaymentResult.textContent = "$" + totalPayment.toFixed(2);
}