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See exactly where every loan payment goes with our free amortization calculator. Enter your loan amount, rate and term to get your monthly payment, total interest and year-one breakdown.
Our free amortization calculator breaks any fixed-rate loan into its repayment schedule. Enter three numbers and instantly see your monthly payment, total interest, and exactly how much of each early payment goes to the lender versus your balance. Follow these steps:
Pro tip: Run the calculator before you sign, not after. A half-point rate difference on a $250,000 30-year loan changes total interest by tens of thousands of dollars, which is powerful negotiating knowledge.
Amortization is the process of paying off a debt in fixed, regular installments over a set period. Each payment is split into two parts: interest, the lender’s charge calculated on the remaining balance, and principal, which reduces the amount you owe. An amortization schedule is the table showing that split for every single payment from the first to the last.
The defining feature of an amortizing loan is that the payment stays the same while its composition changes. Because interest is charged on the outstanding balance, and the balance is largest at the start, early payments are interest-heavy: on a $250,000 loan at 6.5%, the very first $1,580.17 payment contains $1,354.17 of interest and only $226.00 of principal. As the balance shrinks, the interest portion falls and the principal portion rises, until the final payment is almost entirely principal. This front-loading is why the first years of a mortgage feel like treading water.
Most consumer loans are fully amortizing, meaning the scheduled payments exactly retire the debt by the end of the term. Some loans are partially amortizing with a balloon payment, a large lump sum due at the end. A loan with negative amortization has payments so small they do not even cover the interest, so the balance grows, a dangerous structure sometimes seen in exotic mortgages.
Do not confuse the loan’s note rate with its APR (annual percentage rate). The note rate drives the amortization math, but the APR folds in fees and closing costs, making it the better number for comparing loan offers. Also note that this calculator covers principal and interest (P and I) only; a real mortgage bill also includes escrow for property taxes and homeowner’s insurance, plus PMI (private mortgage insurance) if your down payment is under 20%.
Amortization applies far beyond mortgages: auto loans, personal loans, and student loans all amortize the same way. (In accounting, the word also describes spreading the cost of an intangible asset, like a patent, over its useful life, a different concept sharing the name.) Wherever fixed payments retire a balance over time, the same mathematics governs the split between interest and principal.
The monthly payment on a fully amortizing fixed-rate loan comes from this formula: M = P x r(1+r)^n / ((1+r)^n – 1). Here M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments (years times 12).
Worked example 1. A $300,000 mortgage at 7% annual interest for 30 years. Monthly rate r = 0.07/12 = 0.0058333; n = 360. Compute (1.0058333)^360 = 8.1165. Then M = 300,000 x 0.0058333 x 8.1165 / (8.1165 – 1) = 300,000 x 0.0058333 x 8.1165 / 7.1165 = $1,995.91. Total paid: $1,995.91 x 360 = $718,528. Total interest: $718,528 – $300,000 = $418,528. The borrower repays the principal plus another 139% of it in interest.
Worked example 2. A $200,000 loan at 5% for 15 years. Monthly rate r = 0.05/12 = 0.0041667; n = 180. (1.0041667)^180 = 2.1137. M = 200,000 x 0.0041667 x 2.1137 / 1.1137 = $1,581.59. Total paid: $1,581.59 x 180 = $284,686. Total interest: $284,686 – $200,000 = $84,686. Compare the two: halving the term and cutting the rate turns $418,528 of interest on a larger loan into $84,686, even though the monthly payment is only about $400 less. Term length dominates total cost.
Notice how sensitive the payment is to its inputs: principal, rate, and term all flow through the exponential term (1+r)^n, which is why small rate changes move payments more than intuition suggests.
Extra principal payments are the fastest way to beat the amortization math, because every extra dollar skips all the future interest it would have accrued. Take the sample loan: $250,000 at 6.5% for 30 years, payment $1,580.17.
Add just $200 per month toward principal, making the monthly outlay $1,780.17. Solving the amortization equation for the payoff point gives about 265 payments instead of 360, so the loan is gone in roughly 22 years and 1 month, almost 8 years early. Total paid becomes about $1,780.17 x 265 = $471,745, and total interest falls to roughly $221,745. Interest saved: $318,861 – $221,745 = about $97,000.
That is a remarkable return on $200 a month: $53,000 of extra payments ($200 x 265) eliminates about $97,000 of interest. The mechanism is compounding in reverse: each extra dollar permanently removes balance on which future interest would have been charged, and the effect snowballs because the schedule recalculates every month on the smaller balance.
Two practical notes. First, tell your lender in writing that extra amounts apply to principal only, not as early regular payments, and confirm there is no prepayment penalty. Second, consider biweekly payments: paying half the monthly amount every two weeks yields 26 half-payments per year, equal to 13 full monthly payments, which is one extra payment annually and typically shaves 4 to 5 years off a 30-year mortgage.
The same $250,000 loan at 6.5% shows how each payment’s composition flips over time. Monthly rate: 0.065/12 = 0.0054167.
Payment 1: Interest = $250,000 x 0.0054167 = $1,354.17. Principal = $1,580.17 – $1,354.17 = $226.00. Almost 86% of the first payment is interest.
Payment 181 (15 years in): The remaining balance is about $181,399. Interest = $181,399 x 0.0054167 = $982.58. Principal = $1,580.17 – $982.58 = $597.59. Even halfway through the loan’s life, after 15 years of payments totaling $284,431, you still owe $181,399 and each payment is still mostly interest. This is the moment most borrowers find shocking.
Payment 360 (final): The remaining balance is about $1,571.63. Interest = $1,571.63 x 0.0054167 = $8.51. Principal = $1,571.66. The last payment is 99.5% principal.
The year-one totals from the calculator tell the same story in aggregate: of $18,962.04 paid in year one, $16,167.73 is interest and only $2,794.31 reduces the balance. Understanding this curve explains why extra payments early in the loan are so powerful, and why refinancing late in a loan, which restarts the interest-heavy phase, deserves careful math.
Continue your loan research with these tools: our Loan Calculator compares payment scenarios side by side, the Mortgage Calculator adds taxes, insurance, and PMI to the picture, and the Compound Interest Calculator shows the growth side of the same exponential math.
This page hosts a loan amortization calculator that computes the fixed monthly payment, total interest, total paid, and a year-by-year schedule from inputs: loan amount (principal), annual interest rate, loan term in years, and optional start month. Formula: M = P x r(1+r)^n / ((1+r)^n – 1), with r = annual rate / 12 and n = years x 12. Sample: $250,000 at 6.5% for 30 years gives $1,580.17 per month, $318,861.22 total interest, $568,861.22 total paid; year one is $2,794.31 principal and $16,167.73 interest. Covers principal and interest only; excludes taxes, insurance, and PMI. Results are estimates for education, not financial advice.
Sources: U.S. Consumer Financial Protection Bureau, mortgage amortization guidance; Federal Reserve consumer credit resources. Payment math follows the standard fully-amortizing fixed-rate formula; verify figures with your lender’s disclosures before borrowing.
Enter the loan amount, annual interest rate and term in years. The calculator spreads the loan into equal monthly payments where early payments are mostly interest and later payments are mostly principal.
Formula: Monthly payment = P × r(1+r)^n / ((1+r)^n − 1), where P = principal, r = monthly rate, n = total payments.
Amortization is the process of paying off a loan in fixed installments over time. Each payment covers that month’s interest first, and the rest reduces the principal — so the interest portion shrinks every month.
With the standard formula P × r(1+r)^n / ((1+r)^n − 1). For example, a $250,000 loan at 6.5% over 30 years gives a $1,580.17 monthly payment — try it in the amortization calculator above.
Because interest is charged on the outstanding balance, which is largest at the start. In year one of a 30-year loan, most of each payment is interest; principal repayment accelerates later.
Yes — extra payments go straight to principal, which shrinks the balance that future interest is charged on, shortening the loan and cutting total interest.
Amortization spreads loan repayment (or intangible-asset cost) over time; depreciation spreads a tangible asset’s cost over its useful life.
Yes. The calculator above generates a year-by-year schedule instantly, and your lender is required to provide a full amortization schedule at closing for most mortgages. You can also request an updated payoff schedule from your loan servicer at any time to see your exact remaining balance and the interest/principal split of upcoming payments.
Yes, as the example above shows: $200 extra per month on a $250,000 loan at 6.5% pays it off nearly 8 years early and saves about $97,000 in interest. Just make sure the extra amount is applied to principal (not as an early regular payment) and confirm your loan has no prepayment penalty.
It depends on the loan type. Mortgage interest is often deductible if you itemize deductions, subject to IRS limits on loan size. Interest on personal loans, auto loans, and credit cards is generally not deductible. Student loan interest may qualify for a limited deduction. Consult a tax advisor for your situation.
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