Buying a home is one of the biggest financial decisions you'll make. Understanding the true cost of your mortgage, including not just the principal and interest but also essential associated costs like property taxes and insurance, is crucial for budgeting and financial planning. This calculator helps break down your estimated monthly mortgage payment, providing a clear picture of your financial commitment.
What's Included in Your Monthly Payment?
Your total monthly mortgage payment, often referred to as PITI, comprises four main components:
Principal: The portion of your payment that goes towards reducing the actual amount you borrowed.
Interest: The cost of borrowing the money, calculated based on your loan balance and interest rate.
Property Taxes: Annual taxes levied by local governments on your property's value. These are typically paid monthly into an escrow account managed by your lender.
Homeowners Insurance: Insurance that protects your home against damage or loss. Lenders usually require this and collect it monthly for an escrow account.
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, lenders often require PMI to protect them against borrower default. This is also typically paid monthly.
How the Calculator Works
This calculator takes your input for the home's price, down payment, loan term, interest rate, annual property tax, monthly home insurance, and monthly PMI to estimate your total monthly mortgage payment.
1. Loan Amount Calculation:
The first step is to determine the actual loan amount. This is calculated as:
Loan Amount = Home Purchase Price - Down Payment
2. Monthly Principal & Interest (P&I) Calculation:
The core of the mortgage payment is the Principal and Interest (P&I). This is calculated using the standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly P&I payment
P = The principal loan amount (from step 1)
i = Your monthly interest rate (Annual Interest Rate / 12 / 100)
n = The total number of payments over the loan's lifetime (Loan Term in Years * 12)
3. Monthly Property Tax Calculation:
Your annual property tax is divided by 12 to get the monthly amount.
Monthly Property Tax = Annual Property Tax / 12
4. Total Monthly Payment (PITI + PMI):
Finally, all the components are added together for the total estimated monthly payment:
Total Monthly Payment = Monthly P&I + Monthly Property Tax + Monthly Home Insurance + Monthly PMI
Example Scenario:
Let's say you're looking at a home priced at $350,000. You plan to make a 20% down payment ($70,000). The loan term is 30 years, with an annual interest rate of 4.75%. Your estimated annual property tax is $4,200, and monthly homeowners insurance is $120. You don't expect to pay PMI.
Using this calculator with these inputs would yield an estimated monthly payment of approximately $1,932.65.
Why Use This Calculator?
This calculator is a valuable tool for:
Budgeting: Understand the monthly financial impact of homeownership.
Affordability Assessment: Determine how much home you can realistically afford.
Comparing Loans: See how different interest rates, loan terms, or down payments affect your monthly costs.
Financial Planning: Incorporate all relevant homeownership costs into your long-term financial goals.
Remember that this is an estimate. Your actual mortgage payment may vary based on specific lender fees, exact property tax assessments, changes in insurance premiums, and mortgage rate fluctuations. It's always recommended to get pre-approved by a lender for a precise figure.
function calculateMortgage() {
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPayment = parseFloat(document.getElementById("downPayment").value);
var loanTerm = parseInt(document.getElementById("loanTerm").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var annualPropertyTax = parseFloat(document.getElementById("annualPropertyTax").value);
var monthlyHomeInsurance = parseFloat(document.getElementById("monthlyHomeInsurance").value);
var monthlyPMI = parseFloat(document.getElementById("monthlyPMI").value);
var loanAmount = 0;
var monthlyPayment = 0;
var totalPayment = 0;
var totalInterest = 0;
var monthlyInterestRate = 0;
var numberOfPayments = 0;
// Input validation
if (isNaN(homePrice) || homePrice <= 0) {
alert("Please enter a valid Home Purchase Price.");
return;
}
if (isNaN(downPayment) || downPayment < 0) {
alert("Please enter a valid Down Payment.");
return;
}
if (isNaN(loanTerm) || loanTerm <= 0) {
alert("Please enter a valid Loan Term (in years).");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate < 0) {
alert("Please enter a valid Annual Interest Rate.");
return;
}
if (isNaN(annualPropertyTax) || annualPropertyTax < 0) {
alert("Please enter a valid Annual Property Tax.");
return;
}
if (isNaN(monthlyHomeInsurance) || monthlyHomeInsurance < 0) {
alert("Please enter a valid Monthly Home Insurance.");
return;
}
if (isNaN(monthlyPMI) || monthlyPMI < 0) {
alert("Please enter a valid Monthly PMI.");
return;
}
loanAmount = homePrice – downPayment;
if (loanAmount 0) {
monthlyInterestRate = (annualInterestRate / 100) / 12;
numberOfPayments = loanTerm * 12;
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
monthlyPayment = loanAmount / (loanTerm * 12);
}
// Calculate Monthly Property Tax
var monthlyPropertyTax = annualPropertyTax / 12;
// Total Monthly Payment (PITI + PMI)
var totalMonthlyPayment = monthlyPayment + monthlyPropertyTax + monthlyHomeInsurance + monthlyPMI;
// Format results
var formattedMonthlyPayment = totalMonthlyPayment.toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedTotalPayment = (totalMonthlyPayment * numberOfPayments).toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
var formattedTotalInterest = (totalMonthlyPayment * numberOfPayments – loanAmount).toLocaleString(undefined, {
style: 'currency',
currency: 'USD'
});
document.getElementById("monthlyPayment").innerText = formattedMonthlyPayment;
document.getElementById("totalPayment").innerText = "Total Paid Over Life of Loan: " + formattedTotalPayment;
document.getElementById("totalInterest").innerText = "Total Interest Paid: " + formattedTotalInterest;
}