'+freqText+' Payment: $'+payment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
';html+='Total of '+n+' Payments: $'+totalPayment.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
';html+='Total Interest: $'+totalInterest.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
';html+='For a $'+p.toLocaleString()+' loan at '+annualRate+'% for '+years+' years:
';html+='- Periodic Interest Rate: '+(r*100).toFixed(4)+'%
';html+='- Total Number of Payments: '+n+'
';html+='- Principal: $'+p.toLocaleString()+'
';html+='- Total Interest Cost: $'+totalInterest.toLocaleString(undefined,{minimumFractionDigits:2,maximumFractionDigits:2})+'
Calculator Use
The mortgage amortization calculator is an essential tool for any current or prospective homeowner. It allows you to visualize how your debt decreases over time through a schedule of fixed payments. By adjusting variables like interest rates and loan terms, you can understand exactly how much of each payment goes toward the principal balance versus interest charges.
To use this tool effectively, gather your loan details and input the following information:
- Loan Amount
- The total amount of money you are borrowing from the lender (the home price minus your down payment).
- Interest Rate
- The annual percentage rate (APR) charged by the bank for the mortgage.
- Loan Term
- The length of time you have to repay the loan, typically 15, 20, or 30 years.
- Payment Frequency
- Select how often you make payments. While monthly is standard, bi-weekly payments can help pay off a loan faster.
How It Works
Mortgage amortization works by applying a fixed payment to both interest and principal. In the early years of a mortgage, a larger portion of your payment goes toward interest. As the principal balance decreases, the interest calculation (which is based on the remaining balance) also decreases, allowing more of your payment to be applied to the principal. This mortgage amortization calculator uses the standard formula for an amortizing loan:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- M = Total monthly payment
- P = Principal loan amount
- i = Monthly interest rate (annual rate divided by 12)
- n = Number of months (years multiplied by 12)
Calculation Example
Example: Suppose you purchase a home and take out a mortgage for $250,000 at a 6% annual interest rate for a 30-year term.
Step-by-step solution using the mortgage amortization calculator logic:
- Principal (P) = $250,000
- Monthly Interest Rate (i) = 0.06 / 12 = 0.005
- Number of Payments (n) = 30 * 12 = 360
- Calculate: M = 250,000 [ 0.005(1.005)^360 ] / [ (1.005)^360 – 1 ]
- Calculate: M = 250,000 [ 0.005(6.022575) ] / [ 5.022575 ]
- Monthly Payment = $1,498.88
- Total Interest Paid = ($1,498.88 * 360) – $250,000 = $289,596.80
Common Questions
What is an amortization schedule?
An amortization schedule is a table detailing each periodic payment on an amortizing loan. It shows the amount of principal and interest that comprise each payment until the loan is paid off at the end of its term.
How do extra payments affect amortization?
Making extra payments directly toward your principal reduces the remaining balance faster. Because interest is calculated based on the current balance, reducing the principal reduces the amount of interest you owe in future months, effectively shortening the life of the loan and saving you thousands of dollars.
Does this calculator include PMI, taxes, or insurance?
No, this specific mortgage amortization calculator focuses on the "P&I" (Principal and Interest) portion of your payment. Most homeowners will also have to pay Property Taxes, Homeowners Insurance, and potentially Private Mortgage Insurance (PMI), which are often collected in an escrow account but are not part of the base amortization of the loan principal.