Calculate a mortgage amortization schedule: monthly payment, principal, interest and balance by year or month, plus interest saved with extra payments.
Mortgage Amortization Formula
The calculator first finds the fixed monthly payment for the loan:
It then builds the amortization schedule month by month. Each month, part of the payment covers interest on the remaining balance and the rest reduces principal:
Variables:
- M is the monthly principal and interest payment
- L is the starting loan amount
- r is the monthly interest rate, the annual percentage divided by 1200
- n is a whole number of monthly payments (years * 12), from 1 to 480
- B is the loan balance at the start of a month and Bnew is the balance after the payment
- Im is the interest portion and Pm is the principal portion of that month's payment
- E is the optional extra monthly principal payment (0 if none)
Enter the loan principal, annual note interest rate (not APR), and term in years or months. Zero interest is supported. The calculator returns monthly principal and interest, total interest, payoff time and a year-by-year table. Tax, insurance and fees are excluded. The schedule uses unrounded monthly arithmetic; actual lender billing may differ.
Add an optional extra monthly principal payment to see how prepaying changes the schedule. The model applies extra principal after the scheduled interest at each month-end payment, reducing interest in later periods. It shows payoff time in years and months, interest saved versus the standard schedule, and a shorter table. It does not calculate a calendar payoff date. Confirm the servicer’s payment-application rules.
Interest vs Principal by Year: $300,000 Loan at 6.5% (30-Year)
Early payments on a mortgage are mostly interest. This table shows how the split inside the same $1,896.20 monthly payment shifts over time on a $300,000 loan at 6.5% for 30 years, exactly as the calculator's schedule reports it.
| Year | Principal paid | Interest paid | Interest share | Ending balance |
|---|---|---|---|---|
| 1 | $3,353.18 | $19,401.27 | 85.3% | $296,646.82 |
| 5 | $4,345.79 | $18,408.66 | 80.9% | $280,832.93 |
| 10 | $6,009.43 | $16,745.02 | 73.6% | $254,328.38 |
| 15 | $8,309.94 | $14,444.51 | 63.5% | $217,677.42 |
| 20 | $11,491.13 | $11,263.32 | 49.5% | $166,995.85 |
| 25 | $15,890.13 | $6,864.32 | 30.2% | $96,912.49 |
| 30 | $21,973.15 | $781.30 | 3.4% | $0.00 |
Example Problems
Example 1: Standard amortization schedule.
You borrow $300,000 at 6.5% for 30 years. With r = 6.5 / 1200 = 0.00541667 and n = 360:
Using the unrounded rate 6.5/1200: M = 300,000 * r / (1 - (1+r)-360) ≈ $1,896.20 per month. In year 1 the schedule shows $19,401.27 of interest and only $3,353.18 of principal. Over the full 30 years you pay $382,633.47 in interest.
Example 2: Adding an extra $200 per month.
Same loan, but you pay $200 extra toward principal every month, for $2,096.20 total. The loan is paid off in 23 yr 1 mo instead of 30 yr — 6 yr 11 mo sooner — and total interest drops to $279,184.67, saving $103,448.79 compared with the standard schedule.
Frequently Asked Questions
Why does so little of my payment go to principal at first?
Interest each month is charged on the entire remaining balance, and at the start of a mortgage that balance is at its largest. On a $300,000 loan at 6.5%, the first month's interest alone is 300,000 * 0.00541667 = $1,625, leaving only about $271 of the $1,896.20 payment for principal. As the balance falls, the interest charge shrinks and an ever-larger share of the same fixed payment reduces principal — the crossover point on this loan comes around year 20.
Do extra payments lower my monthly payment?
No. On a standard fixed-rate mortgage, extra principal payments shorten the payoff time and cut total interest, but the required monthly payment stays the same. If you want a lower required payment instead, you would need to refinance, or ask your servicer about recasting — a lump-sum principal payment after which the lender re-amortizes the loan over the remaining term, usually for a small fee.
Is there a penalty for paying off a mortgage early?
Some mortgages have prepayment penalties, depending on the loan terms and applicable rules. Check the loan estimate, closing disclosure or promissory note and ask the servicer before a large prepayment, payoff or refinance. Confirm that extra payments are applied to principal. This calculator does not determine whether a penalty applies.
