Amortization calculator

See exactly how a fixed-rate loan is paid down: periodic payment, principal, interest, remaining balance, total interest, and the effect of extra payments.

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Periodic payment
—
monthly principal + interest
Total interest
—
— of total paid
Payoff
—
scheduled term

Loan balance over time

The outstanding principal should move steadily toward zero
Live
Outstanding balanceUpdates with every input

Payment composition

Interest starts larger; principal becomes larger later
Live
Principal vs interest100% of scheduled payments

Interest and principal by payment

Watch the interest portion fall as the balance falls
Live
Periodic payment remains broadly levelMix changes over time
LIVE LOAN INTELLIGENCE

Read the repayment path, not just the payment

Updates live
Total paid — scheduled payment + any extra payment
Interest share — of the total amount paid
Principal by year 5 — cumulative principal reduction
First-period interest — based on opening balance
Change the rate, term, or extra payment to see how the repayment path changes.
DECISION TOOLS

See the cost of changing the plan

Compare a slightly lower rate, a shorter term, or an extra payment against the current loan.

Live
Scheduled termLIVE
— based on the selected payment frequency
Loan cost flowLIVE
— principal — interest

Amortization schedule — first 24 payments

Live schedule
PeriodPaymentInterestPrincipalExtraEnding balance

Year-by-year repayment checkpoints

Educational view
YearPrincipal paidInterest paidEnding balanceInterest share

Loan assumptions

$
Original principal borrowed
%
Fixed nominal annual rate used for the schedule
How many scheduled payments occur each year
$
Optional amount added to each scheduled payment
Educational model: This calculator models a fixed-rate fully amortizing loan. Taxes, insurance, fees, penalties, and variable-rate changes are not included.
THE CONCEPT

What is amortization?

Amortization is the gradual repayment of a loan through a sequence of scheduled payments. In a standard fixed-rate amortizing loan, every payment contains two pieces: interest for the period and principal repayment. The payment can remain level while the mix changes dramatically over time.

Think of the loan as a balance that is continuously being asked a question: “How much interest did this balance create during this period?” The answer is paid first from the scheduled payment. Whatever remains reduces principal. Because the principal balance gets smaller, the next period's interest charge gets smaller too. That is the engine of amortization. The CFPB describes the same pattern: interest generally takes a larger share at the beginning, while principal takes a larger share later.

Opening balance balance approaches zero early payments late payments interest share ↓ principal share ↑ payment mix shifts
The scheduled payment can remain broadly level while the amount allocated to interest falls and the amount allocated to principal rises.
LIVE VISUAL LAB

Watch one payment transform the loan

Connected to calculator
Opening balance $250,000 The amount still owed before this payment.
→
Payment split $1,580 Interest + principal
→
Ending balance $249,774 Principal paid is the part that actually reduces debt.
First-payment composition Interest 85.7% · Principal 14.3%
Interest this period$1,354.17
Principal this period$225.83
Balance after 12 periods—

The anatomy of one payment

01Opening balance

Start with the principal still owed before the payment.

02Interest

Multiply that balance by the periodic interest rate.

03Principal

Subtract interest from the scheduled payment.

04Ending balance

Reduce the opening balance by the principal paid.

Interest portion

Bₜ₋₁ × i

Interest is driven by the opening balance and the periodic rate.

Principal portion

PMT − Interest

Everything left from the scheduled payment reduces the balance.

Amortization formulas

For a fixed-rate fully amortizing loan, the periodic payment is chosen so that the present value of all scheduled payments equals the amount borrowed. The core payment formula used by this calculator is the standard annuity formula.

PMT
periodic principal-and-interest payment;
P
original loan principal;
i
periodic interest rate = annual rate ÷ payments per year;
n
total number of scheduled payments.
Iₜ
interest charged in period t;
Bₜ₋₁
balance immediately before payment t.
Bₜ
ending balance after payment t;
Principalₜ
the principal portion of payment t.
START P opening balance PERIOD CALCULATION Interest = B × i Principal = PMT − I the two pieces add back to PMT END Bₜ new balance
Every payment is a small balance transformation: interest is recognized, principal is reduced, and the new balance becomes the next period's starting point.
EDUCATIONAL GRAPH LAB

See the amortization pattern, not just the answer

These charts use the same live loan assumptions above. Change the rate, term, frequency, or extra payment and the teaching graphics update with the calculation.

Live
First 12 payments: interest vs. principal
The total payment may stay nearly level while the internal split changes.
Loan balance: the long descent to zero
A longer term usually keeps the balance higher for longer and therefore exposes more principal to interest.
Read the shape: the first chart teaches the payment anatomy; the second teaches why the interest bill can remain substantial even when the periodic payment looks unchanged.
THE THREE LEVERS

Three ways a repayment path can change

Each lever changes a different part of the amortization story. The calculator above lets you test them with the same loan model.

%
Lower the rate Less interest accrues on each period's opening balance, reducing the total interest burden.
↘
Shorten the term Payments become larger, but the balance is exposed to interest for fewer scheduled periods.
+
Add principal early An extra principal payment lowers future interest because later interest is calculated on a smaller balance.

Worked example: $250,000 at 6.5%

Suppose a borrower takes a $250,000 fixed-rate loan for 30 years with monthly payments and a 6.5% annual rate. The periodic rate is 6.5% ÷ 12, and there are 360 scheduled payments. The calculator then repeats the same balance logic 360 times, with the interest portion shrinking as the balance falls.

First-payment anatomy

Opening balance$250,000
Periodic rate0.5417%
First interest$1,354.17
Principal portionPMT − $1,354.17

The important lesson is not the particular dollar value. It is the mechanism: because the opening balance is largest in the first period, the interest charge is also largest in the first period.

How to read an amortization schedule

An amortization schedule is not merely a list of payments. It is a ledger showing how the debt changes period by period. The most useful columns are opening balance, payment, interest, principal, and ending balance. Calculators commonly present the schedule in monthly or annual views for exactly this reason.

PERIOD PAYMENT INTEREST PRINCIPAL BALANCE 1$1,580$1,354$226$249,774 2$1,580$1,353$227$249,547 12$1,580$1,344$236$247,233 180$1,580$865$715$112,xxx Early: interest dominates Later: principal dominates
Illustrative schedule structure. Your live calculator above uses your exact inputs and recomputes every row.

Why extra payments matter

An extra payment does more than reduce the balance by the amount you add. By lowering the balance earlier, it also reduces the interest charged in every later period. That creates a compounding effect in the opposite direction: instead of interest building on a large balance, future interest is calculated on a smaller one.

Without extra payments

Longer balance path

The scheduled payment follows the original amortization plan and interest is charged on the larger balance for longer.

With extra payments

Earlier principal reduction

The balance falls faster, so later interest charges are calculated on a smaller base.

Practical guidance

  • Compare total interest, not just the monthly payment. A longer term can reduce the periodic payment while increasing lifetime interest.
  • Look at the first few schedule rows. They show how much of the payment is being absorbed by interest.
  • Then look at the final third of the schedule. That is where principal typically dominates the payment mix.
  • Test extra payments separately. The live scenario tools show both the payoff path and the change in total interest.
  • Remember what this model excludes. Mortgage taxes, insurance, fees, variable-rate adjustments, prepayment penalties and lender-specific rounding are outside the fixed-rate principal-and-interest model.

Amortization calculator FAQ

What does amortization mean?
It means the loan balance is gradually reduced through scheduled payments. Each payment allocates part to interest and part to principal.
Why is more interest paid at the beginning?
Interest for a period is calculated from the outstanding balance. The opening balance is largest at the beginning, so the interest charge is usually largest then. As principal falls, the interest portion falls too.
Does a longer loan term reduce total cost?
Usually, a longer term lowers the scheduled periodic payment but spreads interest over more periods, which can increase total interest for the same rate and principal.
What is the difference between principal and interest?
Principal is the amount that reduces the debt itself. Interest is the financing cost for carrying the outstanding balance during the period.
How does an extra payment change the schedule?
In this calculator, the extra amount is applied directly to principal after the scheduled interest calculation. That can shorten the payoff period and reduce future interest because subsequent periods begin with a smaller balance.
Does this calculator include taxes and insurance?
No. It models principal and interest for a fixed-rate fully amortizing loan. Real mortgage bills can include taxes, insurance, fees and other charges.
FINAL NOTE

Use an amortization schedule as a transparent model of the loan mechanics. The numbers are precise for the assumptions entered, but the model is only as good as those assumptions. A lender's contract, payment dates, rounding conventions and additional charges can produce a different real-world schedule.