What is an amortization schedule?

It's the month-by-month plan showing how a fixed-rate loan is paid off. Each payment is the same total, but the split shifts: early on most of it is interest, and over time more goes to principal. The schedule lists the payment, the interest and principal portions, and the remaining balance until it reaches zero at the end of the term.

How is the monthly payment calculated?

With M = P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of payments (years × 12). Example: $320,000 at 6.5% for 30 years gives r = 0.0054167, n = 360, and M = $2,022.62 per month. The formula sizes the payment so the balance hits exactly zero on the final month.

Why is so much early payment interest?

Interest is charged on the outstanding balance, which is largest at the start. On a $320,000 loan at 6.5%, the first month's interest is about $1,733 of the $2,022.62 payment — only ~$290 reduces principal. As the balance falls, the interest share shrinks and the principal share grows, so the loan pays down faster near the end.

How does the loan term affect total interest?

A shorter term means a higher monthly payment but far less interest. The same $320,000 at 6.5% costs $2,022.62/month and $408,142 interest over 30 years, but $2,787.54/month and just $181,758 over 15 years — less than half the interest. Longer terms lower the monthly payment at the cost of much more total interest.

What does this calculator leave out?

It models principal and interest on a fixed-rate loan only. It excludes property taxes, homeowner's insurance, PMI, HOA dues and any fees, so a real mortgage payment (often quoted as PITI) will be higher. It also assumes the rate never changes and you make exactly the scheduled payment. Treat it as a planning estimate — educational, not financial advice.

Amortization Schedule Calculator

Term	Monthly	Total interest
15 yr	$2,787.54	$181,757.84
20 yr	$2,385.83	$252,600.17
30 yr	$2,022.62	$408,142.36

An amortization schedule is the repayment plan behind every fixed-rate loan. The monthly payment never changes, but its makeup does: each month interest is charged on the remaining balance, and whatever's left of the payment chips away at the principal. Because the balance is highest at the start, early payments are mostly interest and later ones mostly principal. The schedule lays this out month by month until the balance reaches zero.

Reviewed: June 20, 2026 · Author: Naveen P N, Founder — AI Calculator · Verified against: the standard amortizing-loan formula, recomputed in code. Not financial advice.

The amortization formula

Monthly payment

M = P × r ÷ (1 − (1 + r)⁻ⁿ)

Each month

interest = balance × r · principal = M − interest

P is the loan amount, r is the monthly rate (annual rate ÷ 12), and n is the number of payments (years × 12). The payment formula sizes M so the balance lands on exactly zero at payment n. From there the schedule is mechanical: charge interest on the current balance, subtract it from the payment to get the principal portion, reduce the balance, repeat. The total interest is simply M × n − P.

Worked example — $320,000 at 6.5% for 30 years

Scenario: loan $320,000, rate 6.5% (r = 0.0054167), term 30 years (n = 360).

Monthly payment

320,000 × 0.0054167 ÷ (1 − 1.0054167⁻³⁶⁰) = $2,022.62

Total interest

2,022.62 × 360 − 320,000 = $408,142.36

The payment is $2,022.62 and you'll pay $408,142 of interest over 30 years — more than the original loan. Month one's interest alone is about $1,733, so only ~$290 reduces principal; by the final year almost the whole payment is principal. Shortening the term flips the maths: at 15 years the payment rises to $2,787.54 but total interest drops to $181,758 — less than half. That trade-off, lower payment versus less interest, is the central choice in any loan.

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Frequently Asked Questions

What is amortization?⌄

The plan that pays a fixed-rate loan to zero. Fixed payment; interest share falls, principal share rises.

How is the payment found?⌄

M = P·r ÷ (1 − (1+r)⁻ⁿ). $320,000 at 6.5%/30yr = $2,022.62/month.

Why is early payment mostly interest?⌄

Interest is on the balance, biggest at the start. Month one: ~$1,733 interest, ~$290 principal.

Does a shorter term save money?⌄

Yes — 15 yr is $2,787.54/mo but $181,758 interest vs $408,142 over 30 yr.

What's excluded?⌄

Taxes, insurance, PMI, HOA, fees. Real mortgage payment (PITI) is higher.

Amortization Schedule Calculator

Amortization — Quick answer