A mortgage is a significant financial commitment, typically used to purchase real estate. It's a loan from a lender (like a bank) that you repay over a set period, with interest. The property itself serves as collateral, meaning the lender can seize it if you fail to make your payments.
Key Components of a Mortgage Calculation:
Loan Amount (Principal): This is the total amount of money borrowed to buy the property. It's the initial amount that needs to be repaid.
Annual Interest Rate: This is the percentage charged by the lender on the outstanding loan balance. Mortgages typically have fixed rates (stay the same for the life of the loan) or adjustable rates (can change over time).
Loan Term: This is the length of time over which the loan must be repaid, usually expressed in years. Common terms are 15, 20, or 30 years.
Payment Frequency: This refers to how often payments are made. Most common are monthly, but bi-weekly or weekly payments can help pay down the loan faster.
How is the Monthly Mortgage Payment Calculated?
The standard formula for calculating the fixed monthly payment (M) of a mortgage is derived from the formula for an ordinary annuity:
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 borrowed)
i = Your monthly interest rate (annual interest rate divided by 12)
n = The total number of payments over the loan's lifetime (loan term in years multiplied by 12 for monthly payments)
If you choose a different payment frequency (like bi-weekly), 'i' and 'n' need to be adjusted accordingly:
For Bi-Weekly Payments: i = Annual Rate / 26, n = Loan Term (Years) * 26
For Weekly Payments: i = Annual Rate / 52, n = Loan Term (Years) * 52
Our calculator uses these formulas to determine your regular payment amount.
What is an Amortization Table?
An amortization table is a detailed schedule that breaks down each loan payment into its principal and interest components over the life of the loan. For each payment period, it shows:
Payment Number: The sequence of the payment.
Payment Date: The estimated date the payment is made.
Payment Amount: The fixed amount paid each period.
Principal Paid: The portion of the payment that reduces the loan's outstanding balance.
Interest Paid: The portion of the payment that goes towards interest.
Remaining Balance: The amount of the loan still owed after the payment is applied.
As you progress through the amortization schedule, you'll notice that the principal portion of each payment gradually increases, while the interest portion decreases. This is because interest is calculated on the remaining balance, which shrinks over time.
Why Use a Mortgage Calculator and Amortization Table?
Budgeting: Estimate your total monthly housing costs, including principal, interest, and potentially taxes and insurance (though this calculator focuses on P&I).
Comparison Shopping: Compare loan offers from different lenders by seeing how varying interest rates and terms affect your payments.
Financial Planning: Understand the long-term cost of your mortgage and how much interest you'll pay over its lifetime.
Accelerated Payments: See how making extra principal payments or choosing a more frequent payment schedule can significantly reduce the total interest paid and shorten the loan term.
This calculator provides an essential tool for anyone navigating the complexities of a mortgage, helping to make informed financial decisions.
function formatCurrency(amount) {
return '$' + amount.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
function formatNumber(num) {
return num.toFixed(2);
}
function calculateMortgage() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var paymentFrequency = parseInt(document.getElementById("paymentFrequency").value);
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(paymentFrequency) ||
loanAmount <= 0 || annualInterestRate < 0 || loanTermYears <= 0 || paymentFrequency 0) {
monthlyPayment = loanAmount * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
monthlyPayment = loanAmount / numberOfPayments; // Handle zero interest rate
}
var totalAmount = monthlyPayment * numberOfPayments;
var totalInterest = totalAmount – loanAmount;
var totalPrincipal = loanAmount;
document.getElementById("monthlyPayment").innerText = formatCurrency(monthlyPayment);
document.getElementById("totalPrincipal").innerText = formatCurrency(totalPrincipal);
document.getElementById("totalInterest").innerText = formatCurrency(totalInterest);
document.getElementById("totalAmount").innerText = formatCurrency(totalAmount);
// Generate Amortization Table
var amortizationTableBody = document.getElementById("amortizationTableBody");
amortizationTableBody.innerHTML = ""; // Clear previous table
var remainingBalance = loanAmount;
var currentDate = new Date(); // Use current date as start date for payments
for (var i = 0; i < numberOfPayments; i++) {
var interestPayment = remainingBalance * monthlyInterestRate;
var principalPayment = monthlyPayment – interestPayment;
// Adjust for the last payment to ensure balance is exactly zero
if (i === numberOfPayments – 1) {
principalPayment = remainingBalance;
interestPayment = monthlyPayment – principalPayment; // Recalculate interest for last payment if needed
if (principalPayment < 0) principalPayment = remainingBalance; // Ensure we don't pay negative principal
if (interestPayment remainingBalance) {
principalPayment = remainingBalance;
interestPayment = monthlyPayment – principalPayment; // Adjust interest accordingly
}
// Ensure interest payment is not negative
if (interestPayment < 0) {
interestPayment = 0;
}
remainingBalance -= principalPayment;
if (remainingBalance < 0) remainingBalance = 0; // Ensure balance doesn't go below zero
var paymentDate = new Date(currentDate);
switch (paymentFrequency) {
case 12: // Monthly
paymentDate.setMonth(currentDate.getMonth() + i + 1);
break;
case 26: // Bi-Weekly
paymentDate.setDate(currentDate.getDate() + (i * 14));
break;
case 52: // Weekly
paymentDate.setDate(currentDate.getDate() + (i * 7));
break;
}
var row = amortizationTableBody.insertRow();
row.insertCell(0).innerText = i + 1;
row.insertCell(1).innerText = paymentDate.toLocaleDateString();
row.insertCell(2).innerText = formatCurrency(monthlyPayment);
row.insertCell(3).innerText = formatCurrency(principalPayment);
row.insertCell(4).innerText = formatCurrency(interestPayment);
row.insertCell(5).innerText = formatCurrency(remainingBalance);
}
}
// Trigger calculation on load with default values
document.addEventListener('DOMContentLoaded', function() {
calculateMortgage();
});