Mortgage Amortization Calculator
Enter your loan details to get your monthly payment, the total interest you will pay over the life of the loan, your payoff date, and a full month-by-month and year-by-year amortization schedule. Add an extra monthly principal payment to see how much faster you can pay off your mortgage and how much interest you can save.
What is mortgage amortization?
Amortization is the process of paying off a debt through regular installments over time. Each mortgage payment covers two things: the interest owed on the remaining balance, and a portion that reduces the principal. Early in the loan, the vast majority of each payment goes toward interest. As the balance shrinks over the years, more of each payment goes toward principal. By the final payment, nearly all of it is principal. This gradual shift is what an amortization schedule maps out, month by month, from the first payment to the last.
How the monthly payment is calculated
The standard formula for a fixed-rate mortgage payment is the PMT (payment) formula from time-value-of-money mathematics. Given a loan amount P, a monthly interest rate r (annual rate divided by 12), and n total monthly payments (years times 12), the monthly payment is: P times r times (1 + r)^n divided by ((1 + r)^n minus 1). For a $320,000 loan at 6.8% annual interest over 30 years, the monthly rate is 0.5667%, giving a monthly payment of roughly $2,090. Over 360 payments, that totals about $752,000, meaning roughly $432,000 in interest on top of the original $320,000 principal.
The effect of extra principal payments
Adding even a modest extra principal payment each month can dramatically reduce total interest paid and cut years off the loan term. Because the extra payment reduces the outstanding balance immediately, every subsequent month accrues less interest. On a $320,000 loan at 6.8% over 30 years, an extra $200 per month in principal saves roughly $57,000 in interest and shortens the loan by about 5 years. The earlier in the loan you start extra payments, the greater the compounding benefit, since interest accrual is highest when the balance is largest.
Down payment and loan amount
The loan amount is simply the home purchase price minus your down payment. A larger down payment reduces the principal, which lowers both the monthly payment and the total interest paid. A 20% down payment also typically eliminates Private Mortgage Insurance (PMI), which adds cost on top of the principal-and-interest payment. For example, on a $400,000 home, a 20% down payment of $80,000 means a $320,000 loan; a 10% down payment of $40,000 leaves a $360,000 loan, which at the same rate and term adds hundreds of dollars per month and tens of thousands of dollars in total interest.
How Loan Term Affects Total Interest
| Loan Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| 10 years | $3,686 | $122,348 | $442,348 |
| 15 years | $2,848 | $192,608 | $512,608 |
| 20 years | $2,432 | $263,636 | $583,636 |
| 25 years | $2,205 | $341,395 | $661,395 |
| 30 years | $2,090 | $432,310 | $752,310 |
Illustrative example: $320,000 loan at 6.8% annual interest rate.
Frequently asked questions
Why do I pay so much more interest in the early years?
Interest is calculated each month as a percentage of the remaining balance. When the balance is large at the start of the loan, the interest charge is large, which leaves only a small portion of the fixed payment to reduce principal. As the balance slowly falls, the monthly interest charge drops, and more of each payment goes to principal. This is amortization: the same fixed payment gradually shifts from mostly interest to mostly principal.
What is the difference between a 15-year and a 30-year mortgage?
A 15-year mortgage has a higher monthly payment but costs far less in total interest because you borrow for half the time. A 30-year mortgage has a lower monthly payment, making it more accessible, but the longer accrual period means total interest paid can exceed the original loan amount. The choice depends on your cash flow, how long you plan to stay in the home, and whether the savings from a lower rate (15-year loans often carry lower rates) outweigh the higher monthly obligation.
How do extra payments shorten my loan?
Any extra amount you pay above the standard monthly payment goes directly toward reducing the principal balance. A lower balance means less interest accrues the next month, so more of your regular payment can also go to principal. This creates a compounding effect that shortens the loan. You can make extra payments monthly, or as lump sums whenever you have surplus cash, such as after a bonus or tax refund.
What is a payoff date and how is it calculated?
The payoff date is the month and year in which your final mortgage payment is made and the balance reaches zero. It is calculated by starting from your first payment date and counting forward by the number of monthly payments needed to fully amortize the loan. With no extra payments on a 30-year loan starting in January 2026, the payoff date is December 2055. Extra payments reduce the number of payments needed and pull the payoff date earlier.
Does this calculator include property taxes and insurance?
No, this calculator focuses on the principal-and-interest portion of your mortgage payment, which is what amortization describes. Your actual monthly housing cost will also include property taxes, homeowners insurance, and possibly PMI and HOA fees. Those amounts pass through to escrow and do not reduce your loan balance. Add them separately to get your total monthly housing payment.
What is a good interest rate for a mortgage?
Mortgage rates change frequently based on central bank policy, inflation, and bond markets. As a rough guide, rates on a 30-year fixed mortgage in the US have ranged from about 3% to 8% in recent years. The rate you qualify for depends on your credit score, loan-to-value ratio, loan type (conventional, FHA, VA), and the lender. A difference of even 0.5% on a $300,000 loan changes the total interest paid by roughly $30,000 over 30 years, so comparing lenders is worthwhile.