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 demystify the process by providing an estimate of your principal and interest payment based on key loan details.
How the Calculation Works
The monthly mortgage payment (excluding taxes, insurance, and potential PMI) is determined by the loan principal, the interest rate, and the loan term. The standard formula used is the annuity formula, which calculates the fixed periodic payment required to amortize a loan over its term:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount (Home Purchase Price – Down Payment Amount)
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)
Input Definitions:
Home Purchase Price: The total agreed-upon price for the property you intend to buy.
Down Payment Amount: The upfront sum of money you pay towards the purchase price. This reduces the total amount you need to borrow.
Loan Term (Years): The duration over which you agree to repay the loan. Common terms are 15, 20, or 30 years. A longer term usually means lower monthly payments but more interest paid over time.
Annual Interest Rate (%): The yearly rate charged by the lender, expressed as a percentage. This rate significantly impacts your monthly payment and the total interest paid.
Why This Matters:
Knowing your estimated monthly principal and interest payment is the first step in understanding your overall housing costs. It helps you:
Budget Effectively: Allocate funds accurately for your mortgage.
Compare Loan Offers: Evaluate different mortgage products and lenders.
Determine Affordability: Gauge whether a property falls within your financial reach.
Plan for the Future: Understand the long-term financial implications of your home purchase.
Disclaimer: This calculator provides an estimate for principal and interest payments only. It does not include property taxes, homeowner's insurance, private mortgage insurance (PMI), or other potential fees, which will increase your actual total monthly housing expense. Consult with a mortgage professional for a precise loan estimate.
function calculateMortgage() {
var homePrice = parseFloat(document.getElementById("homePrice").value);
var downPaymentAmount = parseFloat(document.getElementById("downPaymentAmount").value);
var loanTermYears = parseInt(document.getElementById("loanTermYears").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = "; // Clear previous results
if (isNaN(homePrice) || isNaN(downPaymentAmount) || isNaN(loanTermYears) || isNaN(annualInterestRate)) {
resultDiv.innerHTML = "Please enter valid numbers for all fields.";
return;
}
if (homePrice <= 0 || downPaymentAmount < 0 || loanTermYears <= 0 || annualInterestRate = homePrice) {
resultDiv.innerHTML = "Down payment cannot be greater than or equal to the home price.";
return;
}
var loanPrincipal = homePrice – downPaymentAmount;
var monthlyInterestRate = (annualInterestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPayment;
if (monthlyInterestRate === 0) {
monthlyPayment = loanPrincipal / numberOfPayments;
} else {
var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
monthlyPayment = loanPrincipal * (numerator / denominator);
}
if (isNaN(monthlyPayment) || !isFinite(monthlyPayment)) {
resultDiv.innerHTML = "Calculation resulted in an invalid number. Please check your inputs.";
return;
}
resultDiv.innerHTML = "$" + monthlyPayment.toFixed(2) + "Principal & Interest per month";
}