A mortgage is a significant financial commitment, and understanding how your monthly payment is calculated is crucial. This calculator helps you estimate your Principal and Interest (P&I) payment based on the loan amount, interest rate, and loan term. While this calculator focuses on the core P&I components, remember that your actual monthly mortgage payment may also include other costs like property taxes, homeowners insurance, and potentially Private Mortgage Insurance (PMI) or Homeowners Association (HOA) fees. These additional costs are often referred to as "escrow" and are typically included in your total monthly housing expense.
How the Mortgage Payment is Calculated
The formula used to calculate the fixed monthly payment (M) for a mortgage is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount (the amount you borrow)
i = Your monthly interest rate. This is calculated by dividing your annual interest rate by 12 (e.g., if your annual rate is 3.5%, your monthly rate 'i' is 0.035 / 12 = 0.00291667).
n = The total number of payments over the loan's lifetime. This is calculated by multiplying the number of years in the loan term by 12 (e.g., for a 30-year mortgage, n = 30 * 12 = 360).
Using the Calculator for Reviews
This calculator is an invaluable tool for:
Comparing Loan Offers: When reviewing different mortgage offers, you can input the loan amount, interest rate, and term for each offer to see the resulting monthly P&I payment. This allows for a direct, apples-to-apples comparison of the core borrowing cost.
Budgeting: Estimate how much house you can afford by adjusting the loan amount until the monthly payment fits your budget.
Understanding Amortization: While this calculator only shows the monthly payment, it's the first step in understanding an amortization schedule, which details how much of each payment goes towards principal versus interest over time.
Refinancing Decisions: If you're considering refinancing, you can use the calculator to estimate new payment scenarios based on current interest rates and your remaining loan balance.
By providing accurate inputs, you gain a clearer picture of your potential mortgage obligations, empowering you to make more informed financial decisions.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("principal").value);
var annualInterestRate = parseFloat(document.getElementById("interestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var monthlyPaymentDisplay = document.getElementById("monthlyPayment");
// Clear previous results if inputs are invalid or empty
if (isNaN(principal) || isNaN(annualInterestRate) || isNaN(loanTermYears) || principal <= 0 || annualInterestRate < 0 || loanTermYears <= 0) {
monthlyPaymentDisplay.textContent = "$0.00";
return;
}
// Calculate monthly interest rate
var monthlyInterestRate = annualInterestRate / 100 / 12;
// Calculate total number of payments
var numberOfPayments = loanTermYears * 12;
// Calculate monthly payment using the mortgage formula
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
var numerator = monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments);
var denominator = Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1;
var monthlyPayment = principal * (numerator / denominator);
// Format the result to two decimal places
monthlyPaymentDisplay.textContent = "$" + monthlyPayment.toFixed(2);
}