Amortization Schedule Calculator
Generate a complete payment-by-payment schedule showing how each installment splits between principal and interest.
What Is an Amortization Schedule?
An amortization schedule is a complete table showing every payment on a loan, broken down into the portion that goes to interest and the portion that reduces the principal balance. It reveals the hidden economics of borrowing: on a standard 30-year mortgage at 6.5%, the first payment allocates 81% to interest and only 19% to principal. By the final payment, the ratio flips to 1% interest and 99% principal. The standard amortization formula calculates a fixed monthly payment that fully repays the loan by the end of the term: M = P[r(1+r)^n] / [(1+r)^n - 1]. Each month, the interest charge is calculated on the remaining balance (balance x monthly rate), and the remainder of the payment reduces the principal. Because the balance decreases with each payment, the interest portion shrinks and the principal portion grows -- this is the defining characteristic of amortization. Understanding amortization is critical for making extra payment decisions. An extra $200/month on a $250,000, 30-year mortgage at 6.5% saves $132,000 in interest and pays off the loan 7 years early. But that extra $200 has the most impact in the early years when the balance is highest. The same $200/month added in year 20 saves only $14,000 because most of the interest has already been paid.
How to Use This Calculator
Enter the Loan Amount
The total amount being financed. For mortgages, this is the purchase price minus your down payment. For business loans, it is the net amount funded after origination fees.
Enter the Interest Rate
The annual interest rate (not APR, which includes fees). Use the rate from your loan agreement. The calculator converts this to a monthly rate for each payment calculation.
Set the Loan Term
The total repayment period in months. Standard terms: 360 months (30-year mortgage), 180 months (15-year mortgage), 60 months (5-year business loan), 48-72 months (auto loan).
Review the Schedule Summary
The output shows your fixed monthly payment, total interest over the loan life, and the year-1 interest/principal split. The interest-as-percentage figure shows what portion of your total payments goes to the lender rather than building equity.
Key Concepts
Principal vs. Interest
Each payment has two components. The principal portion reduces your balance (builds equity). The interest portion is the cost of borrowing (goes to the lender). Early payments are mostly interest; this gradually shifts toward principal as the balance decreases.
Front-Loaded Interest
The phenomenon where the majority of interest is paid in the early years of the loan. On a 30-year mortgage, approximately 83% of the first year's payments go to interest. By year 15, the split is roughly 50/50. This is why refinancing after 15+ years saves less interest than refinancing early.
Extra Principal Payments
Additional payments applied directly to the loan balance, reducing future interest charges and shortening the loan term. Even small extra payments have an outsized impact early in the loan when the balance is highest.
Negative Amortization
Occurs when the monthly payment is less than the interest due, causing the loan balance to grow rather than shrink. Common in some adjustable-rate mortgages (ARMs) and income-driven student loan repayment plans. A dangerous situation because you owe more over time, not less.
Expert Insights
Extra Payments Beat Refinancing in Many Scenarios: Before paying $3,000-$6,000 in refinancing closing costs, calculate whether simply adding the monthly savings from the new rate to your current payment achieves the same result. On a $250,000 loan at 6.5%, paying an extra $200/month achieves a similar total interest savings as refinancing to 5.5% with typical closing costs -- without any fees.
Biweekly Payments Are a Free Hack: Paying half your monthly payment every two weeks results in 26 half-payments (13 full payments) per year instead of 12. That one extra payment per year, applied to principal, shortens a 30-year mortgage by approximately 4-5 years and saves tens of thousands in interest. No refinancing, no extra cost.
Year 1 Interest Is Your Tax Deduction Benchmark: For mortgage interest deductions and business loan interest deductions, the first-year interest figure from the amortization schedule tells you the maximum tax benefit. On a $250,000 mortgage at 6.5%, year-1 interest is approximately $16,100 -- a significant deduction for itemizers. This figure declines each year as principal is paid down.
Frequently Asked Questions
Results are estimates for educational purposes only. Actual amounts may vary based on your specific financial situation, market conditions, and other factors. This calculator does not constitute financial advice.
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