A mortgage amortization calculator generates a complete schedule showing how each monthly payment splits between principal and interest, and how your loan balance decreases over time. It's an essential tool for homebuyers, homeowners considering extra payments, and anyone refinancing a mortgage.
How to Use This Calculator
- Enter the loan amount (home price minus down payment).
- Enter the annual interest rate.
- Enter the loan term in years (typically 15 or 30).
- Click Calculate to see monthly payment, total interest paid, total cost of the loan, and the full amortization schedule.
What This Calculator Measures
- Monthly payment — Fixed amount paid each month (principal + interest, excluding taxes/insurance).
- Principal portion — The part of each payment that reduces your loan balance.
- Interest portion — The part that goes to the lender as interest cost.
- Remaining balance — Outstanding loan amount after each payment.
Formula or Logic
Monthly Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
Where: P = Principal, r = Monthly interest rate (annual rate ÷ 12), n = Total number of payments.
Early in the loan, most of your payment is interest. Over time, more goes to principal — this is the amortization effect.
Example Calculations
Example 1: $300,000 loan, 6.5% rate, 30 years → Monthly payment = $1,896. Total paid = $682,560. Total interest = $382,560.
Example 2: $300,000 loan, 6.5%, 15 years → Monthly payment = $2,614. Total interest = $170,520 — saving $212,040 over the 30-year term.
Understanding Your Results
The amortization schedule reveals the dramatic cost of interest over a long loan. Making one extra principal payment per year can reduce a 30-year mortgage by 4–5 years and save tens of thousands in interest.
Common Mistakes to Avoid
- Not including property taxes, homeowners insurance, and PMI in your total monthly budget (the payment shown here is principal + interest only).
- Comparing monthly payments without accounting for the total interest cost over the full term.
- Forgetting that prepayment penalties exist on some loan types — check before making extra payments.
- Using an interest-only period calculation as if it were fully amortizing.