Best Free Mortgage Calculator: How to Calculate Your Mortgage Payment

document.body.innerHTML = `

Mortgage Calculator

Quickly estimate your monthly mortgage payment.




`; document.styleSheets[0].insertRule( “button:hover { background-color: #45a049; }”, document.styleSheets[0].cssRules.length ); document.getElementById(‘mortgage-form’).addEventListener(‘submit’, function (event) { event.preventDefault(); const principal = parseFloat(document.getElementById(‘principal’).value); const annualInterest = parseFloat(document.getElementById(‘interest’).value) / 100; const years = parseInt(document.getElementById(‘years’).value); if (isNaN(principal) || isNaN(annualInterest) || isNaN(years)) { document.getElementById(‘result’).textContent = ‘Please enter valid numbers.’; document.getElementById(‘result’).style.color = ‘red’; return; } // Calculate monthly payment const monthlyRate = annualInterest / 12; const totalPayments = years * 12; const monthlyPayment = (principal * monthlyRate) / (1 – Math.pow(1 + monthlyRate, -totalPayments)); // Display result document.getElementById(‘result’).textContent = `Your monthly payment is $${monthlyPayment.toFixed(2)}`; document.getElementById(‘result’).style.color = ‘#4CAF50’; });

In this lesson, we’re going to explore how to calculate your monthly mortgage payment. Suppose you take out a mortgage to buy a home with a loan amount of $400,000. The loan has a 30-year term and a fixed annual interest rate of 5%. With this information, how can you determine the monthly mortgage payment?

There is a formula you can use:

Monthly Payment = [P × (r/n)] / [1 − (1 + r/n) ^ − (n × T)]

Where:

  • P = Principal (loan amount)
  • r = Annual interest rate (as a decimal)
  • n = Number of payments per year
  • T = Term of the loan in years

Let’s break this down step by step.

Step 1: Identify the Variables

  • Principal (P): $400,000
  • Annual interest rate (r): Convert 5% to a decimal by dividing by 100: 0.05
  • Number of payments per year (n): 12 (for monthly payments)
  • Loan term (T): 30 years

Step 2: Plug the Values into the Formula

Monthly Payment = [400,000 × (0.05/12)] / [1 − (1 + 0.05/12) ^ − (12 × 30)]

Step 3: Simplify Step by Step

  1. Calculate r/n: /12 = 0.0041666…
  2. Multiply P by (r/n): 400,000 × 0.0041666 = 1,666.66…
  3. Calculate 1 + r/n: 1 + 0.0041666 = 1.0041666…
  4. Raise this value to the power of −(n × T): −(12 × 30) = −(360) 1.0041666−3601.0041666 ^ − 360 = 0.223144…
  5. Subtract this result from 1: 1 − 0.223144 = 0.776856…
  6. Divide the numerator by the denominator: 1,666.66 / 0.776856 = 2,147.29

Final Result:

Your monthly mortgage payment is $2,147.29, rounded to the nearest cent.

Key Takeaways:

This step-by-step breakdown demonstrates how to calculate your monthly mortgage payment manually. Alternatively, you can use a free mortgage calculator to save time and ensure accuracy. Enter the loan amount, interest rate, loan term, and payment frequency to quickly find your monthly payment.

Understanding these calculations can help you make informed decisions about your mortgage and budgeting.

Back to top button