Amortization Schedule Calculator

To amortize a loan is to retire it in equal installments, each one part interest and part principal. One rule drives everything: interest is charged on the outstanding balance, and the balance is highest on day one. So the first payment on a long loan is mostly interest — the lender is charging you for money you still owe — and only a thin sliver reaches the debt itself. That sliver lowers the balance, which lowers next month's interest charge, which frees a slightly larger sliver for principal, which lowers the balance a little faster. The payment never changes. The split inside it moves every single month. That is why the balance curve is not a straight line. It barely bends for years, then falls steeply near the end. Nothing about the loan changes at that point; the compounding of your own principal payments simply catches up.

The installment is not chosen by the lender out of habit — it is the solution to an equation. In the standard annuity formula, P = L × i ÷ (1 − (1 + i)^-n), where L is the amount financed, i is the periodic rate (the annual rate divided by 12 on a monthly loan) and n is the total number of payments. The formula answers exactly one question: what constant amount, paid n times, exactly extinguishes the balance given that interest keeps accruing on whatever is left? Once you have P, the schedule builds itself. Each month interest equals balance × i, principal equals P − interest, and the new balance is the old one minus that principal. Every fixed-rate mortgage, auto loan, personal loan and student loan on a level-payment plan uses this same arithmetic. Only the three inputs change.

Each row in the table sums twelve payments: how much interest you paid that year, how much principal you actually cleared, and what you still owed at year end. Two things usually surprise people. The first is how little principal disappears in the opening years of a long loan. The second is how late the crossover comes — the month when the principal slice finally exceeds the interest slice. On a 30-year loan at a typical rate, that crossover lands somewhere in the middle third of the term, not at year fifteen by symmetry. The "total interest" figure is the one worth sitting with. It is not a fee buried in fine print; it is the price of spreading the purchase over that many years, and it is often a large fraction of the amount borrowed.

An extra amount applied to principal does something permanent: it deletes every future interest charge that principal would have carried for the rest of the term. That is why timing dominates. A payment made in year one removes interest across the entire remaining term. The identical amount paid in the final year removes interest for a few months only. The money is the same; the leverage is not. This is the whole logic behind lump-sum overpayments and biweekly schedules. Two practical cautions. First, tell the servicer in writing that extra funds are to be applied to principal — otherwise some will hold them as a prepaid future installment, which does not reduce the balance and saves nothing. Second, some contracts carry a prepayment penalty; whether one applies, and for how long, depends on the loan type and the contract, so read the note and the disclosure before making a large payment.

The table models the loan itself and nothing else. It assumes a fixed rate that never moves, payments made exactly on schedule, and no fees. A real mortgage payment is usually larger than the number shown here, because servicers commonly collect property taxes and homeowners insurance into an escrow account alongside principal and interest, and mortgage insurance may be added on top. Those amounts are not interest and are not part of the amortization math, but they are part of what leaves your account. On an adjustable-rate loan the schedule is a projection only — when the rate resets, the payment and the whole remaining table are recomputed. Closing costs, origination fees and points also sit outside this calculation, which is one reason a loan's disclosed APR can be higher than the interest rate you typed in. For the binding numbers, use the lender's written disclosure for your specific loan.