Loan Amortization Calculator
An amortization schedule shows where every payment goes — early payments are mostly interest, late payments mostly principal. The pattern is identical for every fixed-rate loan; only the curve changes.
The amortization formula
Where P is principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments. Each month, interest equals the remaining balance times r; the rest of the payment reduces principal. The balance falls more slowly at first because interest dominates a larger fraction of the payment.
Why early payments are mostly interest
Interest is computed on the outstanding balance, which is highest at the start. On a $300,000 mortgage at 7% for 30 years, the first month's interest is $1,750 against a $1,996 payment — only $246 reduces principal. Twenty years in, those proportions roughly invert. This is why you can pay a mortgage for a decade and still owe most of the original balance, and why extra principal payments early in the loan have an outsized effect.
Worked example: extra principal
A $250,000 mortgage at 6.5% for 30 years carries a $1,580 monthly payment and $318,861 in lifetime interest. Adding just $200 per month in extra principal pays the loan off in 24 years 4 months and saves roughly $80,000 in interest. The same $200 invested at 6.5% wouldn't beat the payoff because the loan rate is the guaranteed return.
What this doesn't account for
- Escrow. Most US mortgages bundle property taxes and insurance into the monthly payment. This calculator shows principal and interest only.
- Variable rates. Adjustable-rate loans recompute payments at reset dates; the schedule shown assumes the rate holds for the full term.
- Prepayment penalties. Some loans charge a fee for early payoff. Check your loan documents before accelerating principal.
- Tax effects. Mortgage interest may be deductible in some jurisdictions and for some borrowers; this is not a tax tool.