About the Amortization Calculator
Amortization is the quiet math inside every fixed-rate loan: each payment is the same size, but the slice going to interest starts huge and shrinks as the balance falls. On a 30-year mortgage, your first payment is mostly interest; around the halfway point the split crosses over; by the final years nearly all of it is equity.
The full schedule below shows year-end balances and how interest declines — practical for seeing the true cost of a rate or term change, and eye-opening for watching how slowly early payments build ownership.
The formula behind it
Fixed payment, fixed rate — the schedule is produced by iterating two lines for each payment:
Interest = balance × (APR / 12) • Principal = payment − interest • New balance = balance − principalThe payment itself comes from the standard annuity formula M = P·r·(1+r)^n/((1+r)^n−1). Because interest is charged on the remaining balance, anything paid early is “worth more” than the same dollar paid later.
Worked example
Running the defaults gives the classic shape of a mortgage:
- Payment: $1,516.94 per month for 360 months.
- In year 1, about $15,500 of interest is paid while principal falls only $2,700 — roughly 15 cents of every payment builds ownership at first.
- By year 15, about 38% of each payment is principal; the crossover — when principal first beats interest — lands around month 232 (year 19.3) on this 6.5% loan.
Takeaway: Total interest across 360 payments is about $306,000 on a $240,000 loan — the borrowed amount, paid back 2.27× in the long run.
What moves the result
- Rate — lower is not linear: going from 6.5% to 5.5% on 30 years cuts interest by more than $47,000 here.
- Term — a 15-year version of the same loan pays roughly $108,000 of interest, a 65% drop.
- Extra principal payments — even $100 extra monthly removes years from the schedule (see the companion loan-amortization calculator for exact numbers).
- Start month — interest accrues from disbursement; payments made before the first due date lower the balance they charge interest on.
Practical tips
- Scan the schedule for the crossover year (principal > interest). Knowing it is far away explains why refinancing in later years can “reset” the slow equity curve.
- Round payments up to the next hundred. In year 1, that rounding goes entirely to principal — no escrow dilution.
- Compare schedules at two different rates, not just payments. Total interest is where low-rate offers earn their keep.
- If your lender quotes extra-to-principal options, verify on the schedule that extra payments shorten by years, not months, and are applied the same month.
- Print the schedule before any rate shopping — the year-end balance column is what “ owing after 10 years” actually means.
Frequently asked questions
Is this the same schedule my lender generates?
For a plain fixed-rate loan, yes — lenders bill the same mechanics (monthly compounding, payment due dates adjusted). Rounding rules vary at the cent level only.
Why is my first statement’s interest higher than this calculator shows?
Your first payment usually covers more than one month of accrual from the loan-date. The tool assumes payments start one month after disbursement.
Does the schedule change if I pay extra?
Yes — every extra dollar is principal, so all later interest shrinks. The loan-amortization calculator on this site quantifies exactly how much time and interest that removes for a given extra amount.