Calculating your potential monthly mortgage payment is the first critical step in the home buying process. This tool helps you understand not just the cost of the loan itself, but the total carrying cost of the property, including taxes and insurance.
Components of a Mortgage Payment
Most home loans are comprised of four main parts, commonly referred to as PITI:
Principal: The portion of your payment that pays down the loan balance.
Interest: The cost of borrowing the money, paid to the lender.
Taxes: Property taxes paid to your local government (usually collected in escrow).
Insurance: Homeowners insurance to protect against damage (also often collected in escrow).
How Interest Rates Affect Affordability
Even a small change in interest rates can significantly impact your monthly payment. For example, on a $300,000 loan, the difference between a 6% and a 7% interest rate is roughly $200 per month. This calculator allows you to test different rate scenarios to see what fits your monthly budget.
The Role of the Down Payment
Your down payment reduces the principal loan amount directly. A larger down payment (typically 20% or more) not only lowers your monthly Principal & Interest payment but also helps you avoid Private Mortgage Insurance (PMI), further reducing your monthly costs.
function calculateMortgage() {
// Get Input Values
var homePrice = parseFloat(document.getElementById('homePrice').value) || 0;
var downPayment = parseFloat(document.getElementById('downPayment').value) || 0;
var interestRate = parseFloat(document.getElementById('interestRate').value) || 0;
var loanTermYears = parseInt(document.getElementById('loanTerm').value) || 30;
var propertyTaxAnnual = parseFloat(document.getElementById('propertyTax').value) || 0;
var homeInsuranceAnnual = parseFloat(document.getElementById('homeInsurance').value) || 0;
var hoaFeesMonthly = parseFloat(document.getElementById('hoaFees').value) || 0;
// Validations
if (homePrice <= 0) {
alert("Please enter a valid Home Price.");
return;
}
// 1. Calculate Loan Amount
var loanAmount = homePrice – downPayment;
if (loanAmount <= 0) {
document.getElementById('mcResults').style.display = 'block';
document.getElementById('monthlyTotal').innerText = "$0.00";
document.getElementById('monthlyPI').innerText = "Paid Off";
return;
}
// 2. Calculate Monthly Principal & Interest (Amortization Formula)
// M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
var monthlyInterestRate = (interestRate / 100) / 12;
var numberOfPayments = loanTermYears * 12;
var monthlyPrincipalInterest = 0;
if (interestRate === 0) {
monthlyPrincipalInterest = loanAmount / numberOfPayments;
} else {
var mathPower = Math.pow(1 + monthlyInterestRate, numberOfPayments);
monthlyPrincipalInterest = loanAmount * ((monthlyInterestRate * mathPower) / (mathPower – 1));
}
// 3. Calculate Escrow and Fees
var monthlyTax = propertyTaxAnnual / 12;
var monthlyInsurance = homeInsuranceAnnual / 12;
var totalMonthlyEscrow = monthlyTax + monthlyInsurance + hoaFeesMonthly;
// 4. Totals
var totalMonthlyPayment = monthlyPrincipalInterest + totalMonthlyEscrow;
var totalPaymentOverLife = (monthlyPrincipalInterest * numberOfPayments);
var totalInterestPaid = totalPaymentOverLife – loanAmount;
// 5. Formatting Output
var formatter = new Intl.NumberFormat('en-US', {
style: 'currency',
currency: 'USD',
minimumFractionDigits: 2
});
// 6. Display Results
document.getElementById('mcResults').style.display = 'block';
document.getElementById('monthlyTotal').innerText = formatter.format(totalMonthlyPayment);
document.getElementById('monthlyPI').innerText = formatter.format(monthlyPrincipalInterest);
document.getElementById('monthlyEscrow').innerText = formatter.format(totalMonthlyEscrow);
document.getElementById('totalInterest').innerText = formatter.format(totalInterestPaid);
}