Understand your mortgage payments and how they break down between principal and interest over the life of your loan. Use our calculator to generate a detailed amortization schedule.
The total amount borrowed for the mortgage.
The yearly interest rate on your mortgage.
The total number of years to repay the loan.
Your Mortgage Summary
$0.00
Monthly Payment = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where P = Principal Loan Amount, i = Monthly Interest Rate, n = Total Number of Payments
0.00
Monthly Interest
0.00
Total Interest Paid
0.00
Total Repayment
Key Assumptions
Loan Amount: $0.00
Annual Interest Rate: 0.00%
Loan Term: 0 years
Principal Paid Interest Paid
Mortgage Amortization Schedule
Payment #
Payment Date
Starting Balance
Monthly Payment
Principal Paid
Interest Paid
Ending Balance
What is a Mortgage Amortization Schedule?
A mortgage amortization schedule is a table that breaks down the periodic payments on a mortgage loan into principal and interest. It shows how much of each payment goes towards reducing the loan balance (principal) and how much is paid in interest. Over the life of the loan, the proportion of your payment allocated to principal gradually increases, while the interest portion decreases. This process is known as amortization.
Who should use it? Anyone who has a mortgage or is planning to take out a mortgage should understand their amortization schedule. It's crucial for homeowners to track their loan progress, plan for early payments, and understand the total cost of their loan. Potential homebuyers can use it to compare different loan offers and estimate their long-term financial commitment.
Common misconceptions: A common misconception is that the interest portion of your payment remains constant. In reality, as your principal balance decreases, the interest paid on that balance also decreases with each subsequent payment. Another misconception is that all mortgage payments are equal in terms of principal reduction; early payments are heavily weighted towards interest, while later payments significantly reduce the principal.
Mortgage Amortization Schedule Formula and Mathematical Explanation
The core of an amortization schedule relies on calculating the fixed monthly payment first. The standard formula for calculating the monthly payment (M) of a loan is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
P = Principal Loan Amount (the total amount borrowed)
i = Monthly Interest Rate (Annual Interest Rate / 12)
n = Total Number of Payments (Loan Term in Years * 12)
Once the monthly payment (M) is determined, each subsequent payment is calculated as follows:
Interest Paid for the Period = Remaining Loan Balance * Monthly Interest Rate (i)
Principal Paid for the Period = Monthly Payment (M) – Interest Paid for the Period
Ending Balance = Starting Balance – Principal Paid for the Period
This process repeats for each payment period until the Ending Balance reaches zero.
Variables Table
Variable
Meaning
Unit
Typical Range
P (Principal)
The initial amount of the loan.
Currency ($)
$50,000 – $1,000,000+
Annual Interest Rate
The yearly rate charged by the lender.
Percentage (%)
2% – 10%+
i (Monthly Interest Rate)
Annual Interest Rate divided by 12.
Decimal
0.00167 – 0.00833+
Loan Term (Years)
The duration of the loan in years.
Years
15, 20, 30 years
n (Number of Payments)
Total number of monthly payments.
Count
180, 240, 360 payments
M (Monthly Payment)
The fixed amount paid each month.
Currency ($)
Varies based on P, i, n
Practical Examples (Real-World Use Cases)
Example 1: First-Time Homebuyer
Scenario: Sarah is buying her first home and needs a mortgage. She's pre-approved for a $350,000 loan at an annual interest rate of 6.5% for 30 years.
Interpretation: Sarah's fixed monthly payment will be approximately $2,211.13. Over 30 years, she will pay about $445,997.80 in interest, meaning the total cost of her home will be close to $795,997.80. Her early payments will consist of a larger portion of interest ($1,906.25 in the first month) and a smaller portion of principal ($304.88).
Example 2: Refinancing a Mortgage
Scenario: John took out a $250,000 mortgage 5 years ago at 7% interest for 30 years. Current rates have dropped, and he wants to refinance to a new 25-year loan at 5.5% interest. His remaining balance after 5 years (60 payments) is approximately $231,500.
Interpretation: By refinancing, John's monthly payment decreases from roughly $1,664.30 (original loan) to $1,415.77. He also saves significantly on total interest paid over the life of the loan, despite extending the repayment period. This demonstrates how refinancing can lead to substantial savings, especially when interest rates fall. This calculator helps visualize the impact of such decisions.
How to Use This Mortgage Amortization Schedule Calculator
Our Mortgage Amortization Schedule Calculator is designed for ease of use. Follow these simple steps:
Enter Loan Amount: Input the total amount you are borrowing for your mortgage.
Enter Annual Interest Rate: Provide the yearly interest rate for your loan. Ensure you use the correct percentage (e.g., 5 for 5%).
Enter Loan Term (Years): Specify the total duration of your mortgage in years (e.g., 15, 30).
Click 'Calculate': Once all fields are populated, click the 'Calculate' button.
How to read results:
Main Result (Monthly Payment): This is the fixed amount you'll pay each month towards your mortgage (principal + interest).
Intermediate Values: These show your total interest paid over the loan's life and the total amount you'll repay.
Amortization Schedule Table: This detailed table shows a month-by-month breakdown. Each row indicates the starting balance, the portion of your payment going to principal and interest, and the remaining balance after the payment.
Chart: The visual chart illustrates how the principal and interest components change over time. You'll see the interest portion decrease and the principal portion increase.
Decision-making guidance: Use the calculator to simulate different loan scenarios. For instance, see how a slightly higher interest rate or a longer loan term impacts your monthly payment and total interest paid. You can also use it to plan for extra payments – inputting a higher monthly payment will show how much faster you can pay off your loan and the interest savings. Understanding these dynamics empowers you to make informed financial decisions about your mortgage.
Key Factors That Affect Mortgage Amortization Results
Several factors significantly influence your mortgage amortization schedule and the overall cost of your loan:
Interest Rate: This is arguably the most critical factor. A higher interest rate means a larger portion of your early payments goes towards interest, and you'll pay significantly more interest over the loan's lifetime. Even a small difference in the annual rate can translate to tens or hundreds of thousands of dollars over 30 years.
Loan Term: A longer loan term (e.g., 30 years vs. 15 years) results in lower monthly payments but substantially higher total interest paid. Conversely, a shorter term means higher monthly payments but less interest paid overall, allowing you to build equity faster.
Loan Amount (Principal): The larger the amount you borrow, the higher your monthly payments and the total interest paid will be, assuming all other factors remain constant. This directly impacts the starting point of your amortization.
Extra Payments: Making additional principal payments beyond the required monthly amount can dramatically shorten your loan term and reduce the total interest paid. Our calculator can help you estimate these savings.
Loan Fees and Closing Costs: While not directly part of the amortization calculation itself, these upfront costs add to the total expense of obtaining the mortgage. Some fees might be rolled into the loan principal, affecting P in the formula.
Inflation and Economic Conditions: High inflation can erode the purchasing power of future dollars, making fixed payments feel less burdensome over time. Conversely, rising interest rates can make refinancing less attractive or even impossible.
Taxes and Insurance (Escrow): Your total monthly housing payment often includes property taxes and homeowner's insurance, collected in an escrow account. These are separate from principal and interest but are essential components of your overall housing cost.
Prepayment Penalties: Some older or specific types of loans may include penalties for paying off the loan early or making large extra payments. Always check your loan agreement for such clauses.
Frequently Asked Questions (FAQ)
What is the difference between principal and interest?
Principal is the original amount of money borrowed. Interest is the cost charged by the lender for borrowing that money, calculated as a percentage of the outstanding principal balance.
Why does the interest portion decrease over time?
Your monthly payment is fixed, but it's split between principal and interest. As you pay down the principal balance, the amount of interest calculated on that smaller balance also decreases each month. This allows a larger portion of your fixed payment to go towards reducing the principal.
Can I pay off my mortgage early?
Yes, most mortgages allow for early payoff. Making extra payments, especially towards the principal, can significantly reduce the loan term and the total interest paid. Check your loan agreement for any prepayment penalties.
How does refinancing affect my amortization schedule?
Refinancing essentially replaces your old mortgage with a new one. This creates a new amortization schedule based on the new loan amount (often the remaining balance of the old loan plus fees), new interest rate, and new loan term. It can lower your monthly payment or reduce the total interest paid.
What happens if I miss a payment?
Missing a payment typically results in late fees and can negatively impact your credit score. Crucially, interest will continue to accrue on the outstanding balance, and the missed payment might not be applied to the principal, potentially extending your loan term if not rectified promptly.
Does the amortization schedule include taxes and insurance?
No, a standard amortization schedule only details the principal and interest components of your mortgage payment. Property taxes and homeowner's insurance are usually paid separately or collected in an escrow account by your lender, adding to your total monthly housing expense.
How accurate is the calculator?
This calculator uses standard financial formulas to provide highly accurate estimates based on the inputs provided. However, actual lender calculations might vary slightly due to specific rounding methods or additional fees not accounted for in this basic model.
What is negative amortization?
Negative amortization occurs when your loan payment doesn't cover the interest due for that period. The unpaid interest is added to your principal balance, meaning you end up owing more than you originally borrowed. This is uncommon with standard mortgages but can happen with certain adjustable-rate or interest-only loans.