Mortgage Amortization Calculator
See every payment split by principal and interest — then model how extra payments cut years off your loan and save thousands in total interest.
How Mortgage Amortization Works
- Each monthly payment covers interest first. In the early years of a 30-year mortgage, the majority of your payment goes toward interest — not equity. This gradually reverses as your balance shrinks.
- Your loan balance at any point in time is simply the present value of the remaining payments discounted at your interest rate. The amortization schedule makes this visible month by month.
- Making even small extra principal payments early in the loan can save tens of thousands in interest and cut years off the payoff date, because you reduce the balance that future interest is calculated on.
Calculation details
Methodology
The scheduled payment uses the fixed-rate amortization formula. Each month, interest equals the remaining principal balance multiplied by the annual rate divided by 12. The rest of the scheduled principal-and-interest payment reduces principal; any entered extra payment reduces principal after the scheduled amount.
Assumptions and limitations
- The rate and scheduled payment remain fixed, payments arrive on time, and extra amounts are applied directly to principal.
- The schedule excludes escrow items such as taxes, insurance, and mortgage insurance because they do not reduce the loan balance.
- Displayed values are rounded to cents, so the final payment may be adjusted slightly to bring the balance to zero.
Worked example: first payment on a $300,000 loan
- Loan amount: $300,000
- 30-year fixed rate: 6.50%
- Scheduled principal-and-interest payment: about $1,896
First payment: about $1,625 interest and $271 principal
Interest is calculated from the outstanding balance, so early payments are interest-heavy. As principal falls, less interest accrues and more of the same scheduled payment reduces the balance.
Official sources
- Consumer Financial Protection Bureau — amortization: Explains how scheduled mortgage payments shift from interest toward principal.
- Consumer Financial Protection Bureau — extra principal payments: Explains applying additional mortgage payments and checking servicer instructions.
Frequently Asked Questions
How does mortgage amortization work?
Each fixed monthly payment is split between interest and principal. Interest is calculated on the remaining loan balance, so early payments are mostly interest. As the balance shrinks, more of each payment applies to principal. By the final years of the loan, nearly the entire payment reduces principal — this is the amortization curve.
How much of my mortgage payment goes to principal vs. interest?
On a new 30-year loan at 6.5%, roughly 84% of your first payment goes to interest and only 16% to principal. This ratio gradually flips over time. By year 20, about half the payment goes to principal. The exact split for your loan is shown month by month in the amortization schedule above.
What happens if I make extra principal payments?
Extra principal payments reduce your outstanding balance immediately. Because future interest is calculated on that lower balance, you pay less total interest and pay off the loan earlier. Even $100–$200 extra per month on a 30-year mortgage can shave 3–5 years off the payoff. The Extra Payment Calculator lets you model this precisely.
What is the difference between a 15-year and 30-year amortization?
A 15-year mortgage has higher monthly payments but you pay roughly half the total interest of a 30-year loan. You also build equity twice as fast. A 30-year mortgage offers lower monthly payments and more financial flexibility, but you'll pay significantly more interest over time. The Loan Compare tool lets you see the exact difference for your loan amount.
How is the monthly mortgage payment calculated?
The standard formula is M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments. For a $300,000 loan at 6.5% over 30 years: r = 0.065/12 ≈ 0.00542, n = 360, which gives a monthly payment of about $1,896.
How to use this estimate
This calculator is an educational planning tool. Results are based on the figures and assumptions entered by the reader, use standard mortgage mathematics, and are not a loan offer, approval, or substitute for a lender's Loan Estimate. Taxes, insurance, fees, mortgage insurance, and available rates vary by borrower, property, lender, and location.
Review the assumptions, compare more than one scenario, and confirm the final numbers with a licensed mortgage professional before making a financial commitment.