Amortization Calculator

What is amortization?

Amortization is paying off a loan with equal, regular payments over a set term. Each payment covers that month’s interest first; the rest reduces the principal (the amount you still owe). Mortgages, auto loans and most personal and student loans are amortizing loans.

An amortization schedule lists every payment and shows how much goes to interest, how much to principal, and the balance left afterwards. This calculator builds that schedule for you and charts it year by year.

How to use this calculator

1. Enter the amount you’re borrowing, the annual interest rate and the term.
2. Pick the month of your first payment to get a payoff date.
3. Optionally add an extra monthly payment to see how much interest and time it saves.
4. Use the chart and the yearly or monthly schedule to see where each payment goes.

The amortization formula

Each month, interest = remaining balance × r. The rest of the payment reduces the balance. Amounts are rounded to the cent, and the last payment is adjusted so the balance ends at exactly $0.

Worked example

$200,000 at 6% for 30 years: r = 0.06 ÷ 12 = 0.005 and n = 360. M = 200,000 × 0.005 × 1.005³⁶⁰ ÷ (1.005³⁶⁰ − 1) = $1,199.10. The first payment is $1,000.00 interest and $199.10 principal. Over 30 years you pay about $231,676 in interest.

Reading your results

The monthly payment stays the same for the whole loan. Total interest is what borrowing costs you. In the chart, the teal part of each bar (interest) shrinks over time while the indigo part (principal) grows.

Assumptions and limits

• Fixed interest rate, monthly payments and monthly compounding, with no fees.
• Principal and interest only. Taxes, insurance, PMI and HOA dues are not included.
• Adjustable-rate loans, interest-only periods and balloon payments are not modelled.
• This is an estimate, not a loan offer. Your lender’s disclosure is the official figure.

How each payment splits over time

Example: $200,000 at 6% for 30 years ($1,199.10 a month). Early on most of the payment is interest; by the end almost all of it is principal.

15 vs 20 vs 30 years

Same $250,000 loan at 6.5%. A shorter term means a higher payment but far less interest.

In practice, 15-year loans often come with a lower rate than 30-year loans, which widens the gap further.

How the interest rate changes your payment

$250,000 over 30 years:

Each 1% added to the rate raises this payment by roughly $155–$175 a month.

Interest rate vs APR

The interest rate sets your monthly payment and is what this calculator uses. The APR (annual percentage rate) also folds in lender fees and some closing costs, so it’s usually a little higher. Use APR to compare offers between lenders, and the interest rate to calculate the payment.

Ways to pay a loan off faster

• Extra monthly principal: even small amounts cut years off a long loan. Try it with the extra-payment field above.
• Occasional lump sums: a bonus or tax refund applied to principal.
• Refinancing to a shorter term or lower rate: compare the closing costs with the interest you’d save.

Before paying extra, check that your lender applies it to principal and that there’s no prepayment penalty.

Glossary

• Principal: the amount borrowed, or the part of it you still owe.
• Interest: the cost of borrowing, charged on the remaining principal.
• Term: how long you have to repay, e.g. 360 months.
• Balance: what you still owe after a payment.
• Prepayment penalty: a fee some loans charge for paying early.
• Escrow: money collected with a mortgage payment for property tax and insurance. Not included here.

Frequently asked questions

About this tool

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Last updated

31 Oct 2026

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