Amortization Calculator

How to use the mortgage amortization calculator

An amortization calculator shows exactly how much of your monthly mortgage payment goes toward your loan principal, versus how much is eaten up by interest. By visualizing your repayment schedule, you can see how your debt decreases over time and how much total interest you’ll pay over the life of the loan.

1. Enter your loan amount. This is how much you borrow. As you repay your loan, this loan amount is called “the principal.”
2. Enter your loan term. This is how long it will take to fully repay the amortized loan. The most popular loan term lengths are 30 years and 15 years, but you can also calculate amortization over a 10- or 20-year term.
3. Enter your interest rate. If you’re already repaying your loan or have gotten preapproved, enter your rate in this field. If you aren’t sure yet what rate you’ll receive, you can start with the current average 30-year mortgage rate of 6.05%, or the average 15-year rate: 5.46%.
4. Enter your loan start date. To accurately calculate how a loan is amortized, you need to know the month you started making repayments. If you don’t have a closing date yet, your best estimate of the future is fine.
5. Enter extra payment information (optional). Making additional payments to the principal can help you pay off your mortgage faster and save on interest.
6. View the chart and schedule. The chart will display the amount of principal and interest you’ve paid, and your remaining loan balance, at any selected point in your amortization schedule. Click on the “Schedule” tab for a month-by-month view of this information. 

Note: To keep your budget realistic, remember that this calculator focuses strictly on the principal and interest portion of your mortgage payment. In a real-world scenario, your monthly payment will likely be higher because it includes escrow costs for property taxes and homeowners insurance, which this calculator does not estimate.

Factors that affect mortgage amortization

Understanding the "why" behind your schedule helps you take control of your debt. Three primary factors dictate how your loan amortizes:

• Loan term: A 30-year mortgage has lower monthly payments but a much slower amortization rate, meaning you’ll pay more interest over time. A 15-year mortgage amortizes much faster, building equity at a rapid clip — but you’ll have a higher monthly payment.
• Interest rate: Since mortgage interest is calculated based on your remaining balance, a higher rate increases the amount of interest you’ll pay each month. This results in a larger portion of your payment going toward interest rather than principal in the early years of the loan.
• Payment frequency: Extra payments are the secret weapon of amortization. By paying even a small amount extra toward your principal each month, you reduce the balance that interest is calculated on, creating a compounding effect that can shave years off your loan and save you thousands of dollars in interest over the repayment term.

Mortgage calculator formula

To calculate your monthly principal and interest (P&I) payment, we use the following formula:

M = P · [ r(1 + r)ⁿ / ((1 + r)ⁿ − 1) ]

Understanding your results

When you review your amortization table, don’t just focus on the final date. Not only does an amortization schedule reveal valuable information about what to expect during repayment, but it can also help you make future-focused decisions, like refinancing or selling your home.

• The tipping point: On a conventional 30-year fixed loan, the point where more of your monthly payment goes toward principal than interest typically doesn't occur until year 18 or 19. This front-loading of interest is why it takes so long to begin building real equity in your property. A 15-year mortgage, on the other hand, typically reaches its tipping point by year three or four.
• Total interest paid: This figure can result in sticker shock for many homeowners. On a $400,000 loan at 6%, you’ll pay more than $463,000 in interest over 30 years. This brings the total cost of the loan to more than double the original $400,000 borrowed.
• Choosing when to refinance: Refinancing restarts your amortization timeline. If you’re still in the interest-heavy early years of your current loan, a new loan at a lower rate can translate to savings. But if you’ve already paid a significant amount of interest, resetting the clock and returning to Month 1 of the amortization schedule (when interest costs are at their peak) can end up costing you more in the long run.
• Equity growth: Your equity consists of your original down payment plus the total principal you have paid down. Assuming the home's market value remains stable, your amortization schedule tracks how this equity grows as your debt decreases.

Amortization example

To see how amortization works in the real world, consider a $400,000 30-year mortgage with a 6.10% fixed rate. Your monthly principal and interest payment would be $2,424.

In the beginning, more than three-quarters of each payment is allocated to interest, rather than paying off the principal. However, as your balance drops, the math shifts in your favor. Around the halfway point of the loan, the ratio flips, and most of your payment goes toward paying down the principal. 

After five years of repaying your mortgage, you’ve paid a total of $145,439 to your lender — but you’ve only reduced the remaining balance by $27,326. If you’re considering refinancing the mortgage to snag a lower interest rate, the best time to do that is early in the loan, before you’ve paid the bulk of your interest charges.

What to consider next

After reviewing your amortization schedule, your next steps depend on your financial goals:

• Prepaying your mortgage: If you can afford it, paying extra on your mortgage — either in small regular installments or in a lump sum — can drastically reduce the amount of interest you pay over the life of the loan.
• Refinancing to a lower rate: Evaluate refinancing if current rates are 1% or more lower than your current mortgage rate, particularly in the first 10 years of your term. Once you are deep into your repayment schedule, you have already paid the majority of the interest; refinancing at that stage essentially resets those high early-year interest costs.
• Shop around with multiple lenders: If you’re in the market for a new mortgage or want to refinance your existing loan, don’t just consider one lender. Securing the best offer involves applying with at least three different lenders.

Related calculators and resources

• 15-year or 30-year mortgage calculator: Compare the total interest costs between the two most popular terms.
• ARM calculator: If you’re considering an adjustable-rate mortgage rather than a fixed-rate loan, this calculator can help you estimate your monthly payments.
• Additional payment calculator: Use this tool to see exactly how much time you can shave off your loan by adding just a small amount to your monthly principal payment.
• Refinance calculator: Use our refinance calculator to determine whether a lower rate could reset your amortization schedule in your favor.
• Compare 30-year mortgage rates: Check out the rates that top lenders are offering today on conventional 30-year mortgages.