Buying a home is one of the most significant financial decisions you will make. Using a mortgage calculator is an essential step in the home-buying process, allowing you to estimate your monthly financial commitment accurately. This tool breaks down the components of your payment, helping you budget effectively.
How the Mortgage Formula Works
Your monthly mortgage payment is primarily composed of Principal and Interest (often abbreviated as P&I). The formula used to calculate this is based on the loan amount, the interest rate, and the loan term (amortization period).
Principal: The portion of your payment that reduces the loan balance.
Interest: The cost of borrowing money, paid to the lender.
In the early years of a standard fixed-rate mortgage, a larger portion of your payment goes toward interest. As the loan matures, more of the payment is applied to the principal balance.
Additional Costs Included in Monthly Payments
While P&I covers the loan itself, most homeowners also pay into an escrow account for other recurring costs. Our calculator includes these critical factors:
Property Taxes: Local governments levy taxes based on your property's assessed value. These are typically paid annually or semi-annually but are often collected monthly by your lender.
Homeowners Insurance: Lenders require insurance to protect the asset against damage from fire, theft, or natural disasters.
HOA Fees: If you buy a condo or a home in a planned community, you may owe Homeowners Association dues. These are usually paid directly to the association but affect your overall affordability.
How Interest Rates Impact Affordability
Even a small difference in interest rates can have a massive impact on your monthly payment and the total cost of the loan. For example, on a $300,000 loan, a 1% increase in interest rate can increase your monthly payment by hundreds of dollars and your total interest paid by tens of thousands over a 30-year term. Use this calculator to test different rate scenarios to see what you can comfortably afford.
Choosing the Right Loan Term
The loan term refers to how long you have to repay the loan. The most common terms in the United States are:
30-Year Fixed: Offers lower monthly payments but results in higher total interest costs over the life of the loan.
15-Year Fixed: Comes with higher monthly payments but significantly reduces total interest paid and allows you to own your home outright much faster.
function calculateMortgage() {
// 1. Get Input Values
var homePrice = parseFloat(document.getElementById('homePrice').value);
var downPayment = parseFloat(document.getElementById('downPayment').value);
var loanTermYears = parseFloat(document.getElementById('loanTerm').value);
var interestRateAnnual = parseFloat(document.getElementById('interestRate').value);
var propertyTaxAnnual = parseFloat(document.getElementById('propertyTax').value);
var homeInsuranceAnnual = parseFloat(document.getElementById('homeInsurance').value);
var hoaFeesMonthly = parseFloat(document.getElementById('hoaFees').value);
// 2. Validate Inputs
if (isNaN(homePrice) || isNaN(downPayment) || isNaN(loanTermYears) || isNaN(interestRateAnnual)) {
alert("Please enter valid numbers for Home Price, Down Payment, Loan Term, and Interest Rate.");
return;
}
// Set defaults for optional fields if empty/NaN
if (isNaN(propertyTaxAnnual)) propertyTaxAnnual = 0;
if (isNaN(homeInsuranceAnnual)) homeInsuranceAnnual = 0;
if (isNaN(hoaFeesMonthly)) hoaFeesMonthly = 0;
// 3. Core Calculations
var loanAmount = homePrice – downPayment;
// Handle case where down payment >= home price
if (loanAmount <= 0) {
alert("Down payment cannot be greater than or equal to the Home Price.");
return;
}
var interestRateMonthly = (interestRateAnnual / 100) / 12;
var totalPayments = loanTermYears * 12;
// Mortgage Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var monthlyPrincipalInterest = 0;
if (interestRateAnnual === 0) {
monthlyPrincipalInterest = loanAmount / totalPayments;
} else {
monthlyPrincipalInterest = loanAmount * (
(interestRateMonthly * Math.pow(1 + interestRateMonthly, totalPayments)) /
(Math.pow(1 + interestRateMonthly, totalPayments) – 1)
);
}
var monthlyTax = propertyTaxAnnual / 12;
var monthlyInsurance = homeInsuranceAnnual / 12;
var totalMonthlyPayment = monthlyPrincipalInterest + monthlyTax + monthlyInsurance + hoaFeesMonthly;
var totalAmountPaid = (monthlyPrincipalInterest * totalPayments);
var totalInterestPaid = totalAmountPaid – loanAmount;
var totalCostOfLoan = totalAmountPaid + (monthlyTax * totalPayments) + (monthlyInsurance * totalPayments) + (hoaFeesMonthly * totalPayments) + downPayment;
// 4. Update UI with Results
// Formatting function for currency
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
document.getElementById('resPrincipalInterest').innerText = formatter.format(monthlyPrincipalInterest);
document.getElementById('resTax').innerText = formatter.format(monthlyTax);
document.getElementById('resInsurance').innerText = formatter.format(monthlyInsurance);
document.getElementById('resHOA').innerText = formatter.format(hoaFeesMonthly);
document.getElementById('resTotalMonthly').innerText = formatter.format(totalMonthlyPayment);
document.getElementById('resTotalInterest').innerText = formatter.format(totalInterestPaid);
// Total cost includes everything paid over the years plus down payment
document.getElementById('resTotalCost').innerText = formatter.format(totalCostOfLoan);
// Show results
document.getElementById('resultsSection').style.display = 'block';
}