Mortgage Amortization Calculator
A mortgage amortization calculator shows how each monthly payment is divided between principal and interest until your loan balance reaches zero. The calculator above creates a complete month-by-month schedule, letting you see your balance shrink and your equity grow.
Amortization simply means paying off a loan through regular payments over time. Here's the surprising part: early payments go mostly toward interest, not principal.
How it's calculated
A mortgage amortization schedule lists every payment over your loan term and shows how much goes to interest, how much goes to principal, and what balance remains. Enter your loan amount, interest rate, and term, then the calculator above does the rest.
Each month, interest is charged on your current balance using a monthly rate equal to your APR divided by 12. The payment stays the same, but as the balance falls, less goes to interest and more goes to principal. That is why the split flips slowly. The CFPB notes that interest payments do not build equity, so your ownership stake grows far slower than the dollars you pay in.
A worked example
Take a $320,000 mortgage at 6.5% APR over a 30-year, 360-month term with no extra payment. The monthly principal and interest payment is $2,022.62.
In month 1, $1,733.33 goes to interest and only $289.28 goes to principal, so just about 14% of that first payment touches what you owe. The split flips slowly over the years, and by the final years almost all of each payment is principal.
Across the full term you pay $408,142 in interest, bringing the total of payments to $728,142.
Common mistakes to avoid
- Assuming payments split evenly between principal and interest. Early on, the bulk goes to interest, and principal catches up only in later years.
- Confusing the APR with the note rate. The note rate sets your monthly interest; the APR also bundles points and fees, so it usually runs higher.
- Expecting fast equity in years 1 to 5. Because early payments are mostly interest, selling or refinancing early can leave you with little equity after closing costs.
- Forgetting that taxes, insurance, and PMI sit outside the amortization schedule. The schedule only covers principal and interest.
- Mistaking a low minimum payment for progress. If a payment fails to cover the interest due, the balance grows. The CFPB calls this negative amortization.
Frequently asked questions
What is a mortgage amortization calculator?
A mortgage amortization calculator builds a month-by-month schedule showing how each payment splits between principal and interest, plus your remaining balance. It reveals how slowly your balance falls in the early years and how equity builds over time. Want to build the same schedule yourself in a spreadsheet? See our mortgage amortization Excel template guide for the formula.
Why does most of my early payment go to interest?
Interest is charged on your full remaining balance, which is largest at the start. So early payments are mostly interest. On a $320,000 loan at 6.5%, month 1 sends $1,733.33 to interest and only $289.28 to principal.
How is the monthly interest calculated?
Your monthly interest rate equals your APR divided by 12. That rate is applied to your current balance each month. As the balance drops, the interest portion shrinks and more of your fixed payment goes to principal.
What is negative amortization?
Negative amortization means the amount you owe goes up even when you pay, because your payment does not cover the interest due. The CFPB warns unpaid interest gets added to your balance, which can leave you owing more than your home is worth.
How can I pay off my mortgage faster?
Adding to principal shrinks the back of your schedule and cuts total interest. Try our extra payment calculator, early payoff calculator, or payoff calculator.
Sources
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