Mortgage Amortization Calculator

Amortization is the mortgage’s hidden shape: early payments are nearly all interest, late ones nearly all principal. Enter a loan, and this calculator returns the payment, the first month’s split, the total interest over the term, and the balance still owed after five years.

The Front-Loaded Interest Machine

An amortizing loan keeps the payment constant and lets its composition migrate: each month, interest is charged on the balance still owed (balance × monthly rate), and whatever of the payment remains retires principal. Because the balance starts at its maximum, the interest share starts at its maximum — on the worked example below, 86 cents of the first payment’s dollar is interest — and declines as the balance declines, the principal share compounding upward until the final payment is nearly all principal. This is not lender trickery but arithmetic: interest is rent on money still borrowed. Its consequences, though, are borrower-relevant in the extreme: equity builds painfully slowly at first (five faithful years retire only ~6% of this loan), refinancing restarts the front-loaded clock, and a loan sold or settled early has mostly bought interest. The calculator prints the four figures that make the shape legible — first split, totals, five-year balance — because a full 360-row schedule persuades nobody like its own summary does.

Worked Example: $400,000 at 6.5% for Thirty Years

The defaults: payment $2,528.27; the first payment splits into $2,166.67 interest and $361.61 principal (the balance’s monthly rent is 400,000 × 0.5417%); total interest over the term is $510,178 — more than the house cost — and after five years of $2,528 payments ($151,700 paid) the balance stands near $374,400, only about $25,600 of principal retired. Each figure is the amortization shape in a different costume: the split shows the starting tilt, the total shows the term’s price (a 15-year term at the same rate would cut it by more than half, as the home-loan page’s comparison shows), and the five-year balance is the number that governs refinances, sales and PMI-cancellation dates. A borrower who has seen these four numbers once reads every future mortgage offer differently — which is the calculator’s entire ambition. There is a fifth figure the page leaves to a sentence: the interest is deductible in some jurisdictions and filing situations, which rebates a slice of the $510,178 at the borrower’s marginal tax rate — material to the true cost, fatal to include blindly, since most filers in the largest mortgage market no longer itemise at all. The calculator prints the gross figure, the only honest default.

Extra Payments: Attacking the Curve’s Weak Point

The shape has a vulnerability: principal retired early escapes interest for every remaining month, so extra payments are worth most exactly when the split is most insulting. An extra $200 a month on the worked example saves roughly $110,000 of interest and shortens the term by about five and a half years — the reader can sense-check the mechanism with this calculator by reducing the starting amount mentally, though pricing extra payments precisely wants this page’s balance formula run iteratively (the credit-card page of this batch runs exactly such a loop in its own dress). The strategic order of operations follows: retire principal early, refinance only when the new loan’s total-interest line — computable here in seconds — beats the remaining schedule’s, and never judge a refinance by its payment alone, since a fresh 30-year clock can lower the payment while raising the total.

Reading a Real Amortization Statement

A servicer’s monthly statement is this page in uniform: it shows the payment’s four-way split (principal, interest, escrow, and any PMI), the balance after posting, and the year-to-date interest the tax authorities may ask about. Two habits make it legible. First, verify one line by hand against the calculator’s recursion — balance times monthly rate is the month’s interest; if the statement disagrees by more than rounding, the servicer has misapplied a payment, an error consumer regulators find with dreary regularity. Second, watch the principal line’s growth rate rather than its size: it compounds at the loan’s own rate (each month’s principal is the previous month’s times (1 + r), to the cent), so a year’s statements let you check the whole schedule’s health from any two adjacent lines. The calculator’s four summary figures are the statement’s abstract; the literacy transfers in both directions.

Related Tools

More from the Finance Calculators hub: the Mortgage Calculator with Taxes and Insurance — this payment plus its escrow entourage — and the Home Loan Calculator, for the same loan priced by affordability.

Frequently Asked Questions

Why is total interest more than the loan itself?

Time, at rent: 6.5% a year on a balance that declines only slowly compounds across 360 months into $510,178 on $400,000 borrowed. Shorten the term and the effect collapses (a 15-year schedule at the same rate pays roughly $227,000 of interest — the balance falls fast enough to starve the rent) — which is the arithmetic hiding inside the folk wisdom that shorter terms are “cheaper” despite their higher payments. The calculator prints total interest on every run precisely because the monthly payment is designed to make this figure forgettable; the page refuses the amnesia.

What is the crossover point?

The month where the principal share first exceeds the interest share — on the worked example it arrives around year 19–20 of 30, shockingly late to most borrowers. Loans cross earlier when rates are lower or terms shorter (a 15-year loan starts nearly balanced). The crossover matters sentimentally (it is when the payment starts feeling like savings) and practically not at all — the balance curve, not the split curve, governs equity decisions — but a calculator page owes the famous landmark its explanation: it is the month balance × rate first falls below half the payment.

Does amortization differ for other loan types?

The machinery is universal — auto loans, personal loans and the EMI page’s instalments all amortize identically, differing only in scale and term — while interest-only and balloon loans deliberately refuse the shape (payments cover only rent, principal due whole at the end), and negative-amortization loans invert it (payments below the rent, balance growing). The calculator models the standard fully-amortizing case its title promises; the variants are named here because a borrower comparing offers must first check which shape each offer wears, a question the payment figure alone will never answer.

How accurate is the five-year balance?

Exact, for the loan as entered — it is the closed form of the same recursion the schedule follows (balance after k payments = P(1 + r)^k − M × ((1 + r)^k − 1) ÷ r) — assuming payments land monthly and no extras, fees or rate changes intervene (an ARM resets the arithmetic at each adjustment). Real servicer statements will match to the cent when their day-count conventions align; small drift in practice comes from payment posting dates, not from the formula. The figure is safe to plan sales and refinances around, which is its job.

Should I choose 30 years or 15?

Run both through the calculator and compare the two honest numbers: the 30-year’s lower payment against the 15-year’s drastically lower total interest (on this loan, roughly $283,000 less) — then ask the household question the arithmetic cannot: is the higher payment’s discipline affordable in bad months, and would the difference, invested instead, beat the mortgage rate after tax and risk? The calculator’s role is to price the fork precisely; a household that can carry the 15 in bad months and lacks a better use for the difference usually takes it, and one that cannot is not irrational for buying flexibility at the 30-year’s stated price.

How is an amortization schedule used at sale or settlement?

The balance formula is the settlement figure’s engine: a sale closes on a payoff quote the servicer computes from the schedule (balance plus interest accrued to the closing day, plus any release fees), and a borrower who can reproduce the balance half of that quote with this page reads the servicer’s number as a peer rather than a supplicant. Divorce settlements, estate divisions and buyouts between co-owners all divide equity as value minus this balance; the calculator’s five-year line is the commonest such division’s input, and its exactness under the stated assumptions is why the page prints it on every run.

What does a bi-weekly payment plan actually change?

It smuggles in a thirteenth monthly payment: half-payments every two weeks make 26 halves — thirteen full payments a year — and the extra annual payment, applied to principal, shortens a 30-year schedule by roughly four to five years and saves interest on the worked example’s scale in the high five figures. The mechanism is pure extra principal (fortnightly money also reaches the balance a few days sooner, a rounding-level effect), which is why the same result is available free by adding a twelfth of a payment monthly — no servicer plan or fee required. The calculator’s balance formula prices either arrangement’s endpoint; the plan’s marketing, not its mathematics, is the product being sold.

Where does the word come from?

From the Latin mors — death: amortization is the killing of a debt by instalments, a mortgage itself being a “death pledge” in its Norman French roots. The schedule’s front-loaded rent is older than the word’s financial sense (medieval tally-stick loans charged similarly), but the level-payment amortization table as a published instrument is a nineteenth-century building-society artifact, mass-printed once homeownership was industrialised. This page computes in milliseconds what those societies’ clerks tabulated by candlelight — the shape, unchanged, is theirs.