How Our Calculators Work
Every CalcGrowth calculator uses standard, industry-recognised financial formulas. This page explains, in plain English, the math behind each tool, the assumptions we make, and the limitations you should keep in mind.
The formulas we use
Compound interest (lump sum)
FV = P × (1 + r/n)^(n × t)Used by the compound interest calculator to project lump-sum growth. P is principal, r is the annual rate, n is compounding periods per year, and t is years.
Future value of an annuity (recurring contributions)
FV = PMT × [((1 + r/n)^(n × t) − 1) / (r/n)]Combined with the lump-sum formula to model regular monthly contributions in the compound interest calculator and reverse-solved in the savings goal calculator to find the monthly amount needed to hit a target.
Loan amortization
M = P × r × (1 + r)^n / ((1 + r)^n − 1)Used by the loan calculator and mortgage calculator to calculate the fixed monthly payment. r here is the monthly rate (annual ÷ 12), n is total months. We then simulate the loan month-by-month to produce the full amortization schedule.
PITI & the 28/36 affordability rule
The mortgage calculator adds property tax, insurance, PMI and HOA on top of principal & interest to give a full PITI payment. The affordability calculator works backwards from gross income using a configurable debt-to-income ratio (default 28% front-end / 36% back-end) to estimate the maximum supportable home price.
Assumptions we make
- Fixed interest rates. Calculators assume the rate you enter stays constant for the full period. Real-world variable-rate loans and investment returns fluctuate over time.
- Consistent contributions or payments. We assume you contribute (or pay) the same amount every period without missing any.
- Monthly compounding by default. Compound interest tools default to monthly compounding unless you change the frequency.
- End-of-period contributions. Monthly contributions are added at the end of each period unless you switch to "beginning of period."
- No taxes or fees are deducted automatically. Real returns are reduced by income tax, capital gains, account fees, and inflation.
- Stable property tax & insurance rates for mortgage and affordability tools — actual rates change yearly and vary by location.
Limitations of our results
- Results are projections, not guarantees. Markets and economies change; future returns may be higher or lower than your assumed rate.
- We do not model closing costs, lender fees, prepayment penalties, escrow shortages, or PMI removal timing. Real loans involve more line items than any calculator can fully capture.
- Tax-advantaged accounts (401(k), IRA, ISA, etc.) have rules our tools don't enforce — treat results as pre-tax, pre-fee estimates.
- Affordability calculators reflect general lender benchmarks. Actual approvals depend on your credit profile, employment history, loan program, and local market.
Editorial process
All calculator logic is implemented in TypeScript by the CalcGrowth team and tested against worked examples from standard finance textbooks and published lender disclosures. Every calculator runs entirely in your browser — your numbers are never sent to or stored on our servers. We update tools whenever standards (such as common DTI limits or PMI thresholds) change.
Spotted a discrepancy or have a suggestion? Please contact us — we read every message.
Disclaimer
All calculators and content on CalcGrowth are provided for educational and informational purposes only and are not personalized financial, investment, tax, or legal advice. Results are estimates and may differ from actual outcomes. Consult a qualified financial advisor before making borrowing or investment decisions. See our full disclaimer.