Amortization calculator

What is an amortization schedule?

A table of every payment on a fixed-rate loan, split into interest and principal, with the balance left after each one. The payment stays the same while the split changes.

Why do early payments go mostly to interest?

Interest is charged on the balance, which is largest at the start. On $200,000 at 6% for 30 years, the first $1,199.10 payment is $1,000 of interest and only $199.10 of principal; principal overtakes interest only in payment 223.

How much will I still owe halfway through?

More than half: after 15 years of that 30-year loan, $142,097.69 is still owed — about 71% of the original amount.

How do extra payments change the schedule?

Every extra dollar goes to principal, so later payments carry less interest and the loan ends early. Enter an extra monthly amount to see the new payoff month.

Is this the same as my lender's schedule?

For a fixed-rate loan with monthly interest, yes to within cents. Adjustable rates, fees and escrow change the real numbers — your lender's statement decides.

What is the formula for the monthly payment?

Payment = P × r ÷ (1 − (1 + r)^−n), where P is the amount borrowed, r is the monthly rate (the annual rate divided by 12) and n is the number of monthly payments. At a 0% rate the payment is simply P ÷ n.

Does a shorter term save money even though the payment is higher?

Yes, because interest is charged on the balance for fewer months. The trade-off is a higher required payment each month, so the shorter term needs more room in the budget.

Do extra payments always go to principal?

Not automatically. Some servicers apply an unlabeled extra payment to the next installment instead. Check the loan's online payment screen or ask the servicer to apply the extra amount to principal.

How the calculation works

For a fixed-rate loan the monthly payment is constant, and each month works the same way: interest for the month equals the current balance times the monthly rate, and whatever is left of the payment reduces the principal. Because the balance falls a little each month, the interest part shrinks and the principal part grows. An extra monthly amount is added to the principal part, so the balance falls faster and the loan ends earlier. The schedule assumes a constant rate, monthly payments made on time, and interest compounded monthly; it does not include taxes, insurance, fees or escrow.

Worked example

Borrow $250,000 at 6.5% for 30 years (360 payments). The monthly rate is 6.5% ÷ 12, and the payment works out to $1,580.17. In the first month interest is $1,354.17 and only $226.00 goes to principal. Principal first exceeds interest in payment 233. Over the full term the interest adds up to $318,861, so the total repaid is $568,861.

Now add $200 a month. The loan ends after 22 years and 1 months instead of 30 years, and total interest falls to $221,243, a saving of $97,618.

Common mistakes

• Comparing loans by the monthly payment only. A longer term lowers the payment and raises the total interest. Compare the total paid, and the balance after the years you expect to keep the loan.
• Forgetting that the payment is only principal and interest. A mortgage bill often also includes property tax, homeowners insurance and mortgage insurance, so it will be higher than the amount shown here.
• Mixing up the rate and the APR. The schedule uses the note rate that determines the interest charged. The APR also folds in some fees and is meant for comparing offers.

Sources and related calculators

Method: the standard level-payment amortization formula for a fixed-rate loan (present value of an ordinary annuity), as taught in introductory finance texts. Related: mortgage calculator, loan payoff calculator and loan calculator.

Estimates for planning only — not financial advice. Your lender's figures decide. How we check our calculators.