Amortization Calculator

How to use this calculator

Six inputs, two of them optional. Fill in the required four and hit Calculate to see your full payment breakdown.

Loan Amount — The total amount you are borrowing. For a home purchase, this is the purchase price minus your down payment. For a car loan, it is the vehicle price minus any trade-in value and down payment. Do not include interest here, only the amount you actually receive or owe.

Annual Interest Rate — The nominal yearly interest rate on your loan. This should be the rate shown in your loan agreement, not the APR. Enter it as a percentage, for example 6.5, not 0.065.

Loan Term (years) — How long you have to repay the loan. Common terms are 30 or 15 years for mortgages, 3 to 7 years for auto loans, and 1 to 7 years for personal loans. Longer terms mean lower monthly payments but significantly more total interest paid.

Payment Frequency — Choose how often you make payments. Monthly is standard in the United States. Biweekly means you pay half the monthly payment every two weeks, which results in 26 half-payments per year, effectively one extra full payment annually. Weekly is less common but available from some lenders.

Extra Payment per Period (optional) — Any amount you plan to add to your required payment each period. Even a small extra payment directed entirely at principal can cut years off your loan and save thousands in interest. Switch to the Extra Payment tab to make this field visible.

Loan Start Date (optional) — If you enter a month and year, the calculator will compute your exact payoff date rather than displaying years and months remaining.

What amortization actually is

Most people know they make monthly loan payments. Fewer understand why the split between principal and interest changes every single month.

Amortization is the process of paying off debt through a fixed schedule of equal regular payments. Each payment covers the interest that accrued since the last payment, and the remainder reduces the principal balance. As the balance falls, less interest accrues each period, so more of your fixed payment chips away at the principal. The process accelerates as it goes.

This is why you feel like your loan barely moves in the first few years. On a 30-year mortgage, you have paid off less than 10% of the principal after 5 years of payments, even though you have made 60 payments. The early payments are almost entirely interest.

Amortization is a self-reinforcing process: every dollar you reduce the principal means slightly less interest next period, which means slightly more principal reduction, which means slightly less interest the period after that. The acceleration is slow at first and dramatic toward the end.

The monthly payment formula

The standard amortization formula calculates a fixed payment amount that will exactly pay off the loan in the specified number of periods:

Monthly Payment = P × r × (1 + r)^n / ((1 + r)^n − 1)

Where:

• P = Principal (loan amount)
• r = Monthly interest rate = Annual rate / 12
• n = Total number of payments = Term in years × 12

For each period, the interest charge is: Interest = Remaining Balance × r

And the principal portion is: Principal = Monthly Payment − Interest

The next period’s balance is: New Balance = Previous Balance − Principal Portion

The elegance of this formula is that it produces the exact same payment every month while the internal split between principal and interest shifts continuously. The math guarantees that after exactly n payments, the balance reaches zero.

How extra payments work

When you make an extra payment beyond your required amount, the entire extra amount reduces your principal balance immediately. There is no new interest calculation that month — you simply owe less going into the next period.

A lower principal balance means lower interest next period, which means even more of your regular payment goes to principal. This creates a compounding acceleration effect. Small consistent extra payments early in a loan have a disproportionately large impact because they reduce the base on which decades of future interest is calculated.

Extra monthly payment	$300K mortgage at 7%	Years saved	Interest saved
$0 (baseline)	30 years, $418,527	—	—
$100/month	27.1 years	2.9 years	$44,264
$200/month	24.7 years	5.3 years	$78,406
$500/month	20.2 years	9.8 years	$142,287
$1,000/month	15.6 years	14.4 years	$201,544

The numbers make an argument no financial advisor can improve upon. Adding $200 per month to a standard mortgage payment saves $78,000 in interest. That $200 per month compounded at 7% over the 5.3 years saved would be worth about $15,000. The interest savings dominate by 5 to 1.

Biweekly vs monthly payments

Switching from monthly to biweekly payments is one of the simplest ways to pay off a loan faster without changing your lifestyle significantly.

Here is the arithmetic: monthly payments mean 12 payments per year. Biweekly payments mean 26 payments per year (52 weeks / 2). At half the monthly payment each time, 26 biweekly payments equal 13 monthly payments. That extra payment goes entirely toward principal every single year.

On a 30-year mortgage:

Scenario	Total payments	Payoff time	Total interest
Monthly	360	30 years	$418,527
Biweekly	308	~23.7 years	$326,108
Biweekly with extra $100	~275	~21 years	~$270,000

Biweekly payments reduce a 30-year mortgage to about 23-24 years and save roughly $92,000 in interest, just from changing payment timing. Many lenders offer biweekly payment plans, though some charge a fee to set them up. You can achieve the same effect by making one extra mortgage payment per year yourself.

Reading the amortization schedule

Each row in the amortization schedule represents one payment period. Here is what the columns mean:

Period — The payment number, starting at 1.

Payment — The total amount paid each period (your regular payment plus any extra).

Principal — The portion of the payment that reduces your loan balance.

Interest — The portion of the payment that goes to the lender as the cost of borrowing.

Balance — Your remaining loan balance after this payment is applied.

The most revealing thing about an amortization schedule is watching the principal column grow and the interest column shrink. On month 1 of a $300,000 mortgage at 7%, you pay $1,750 in interest and $246 in principal. On month 360, you pay just $12 in interest and $1,984 in principal. Same payment amount. Completely different composition.

This schedule also answers the refinance question. If you refinance a 30-year mortgage 10 years in, you restart the schedule from the beginning on a new lower balance. You may lower your monthly payment, but you will pay mostly interest again in the new loan’s early years. Whether refinancing makes sense depends on the rate difference, remaining term, and how long you plan to stay in the home.

Mortgage types and how they affect amortization

Not all mortgages amortize the same way.

Fixed-rate mortgage — The most common type. The interest rate never changes, so the monthly payment is constant. The amortization schedule is fully predictable from day one.

Adjustable-rate mortgage (ARM) — The rate is fixed for an initial period (commonly 5 or 7 years), then adjusts annually based on a benchmark rate. After each rate adjustment, the loan is re-amortized: a new payment is calculated to pay off the remaining balance in the remaining term at the new rate. This means your payment can increase significantly after the fixed period ends.

Interest-only loan — Some loans allow you to pay only interest for an initial period. During this time your balance does not decrease at all. When the interest-only period ends, the loan re-amortizes over the remaining term, often producing a payment shock because the full principal now needs to be paid off in fewer years.

Negative amortization — Certain loan products allow payments below the interest charge. The unpaid interest is added to the balance, meaning you can owe more than you borrowed. These products became notorious in the 2007-2008 housing crisis and are now heavily regulated.

For the vast majority of borrowers with standard fixed-rate loans, the amortization calculator gives you the exact numbers. For ARM loans, calculate at the current rate to see your payments now and re-run the calculator at potential future rates to stress-test affordability.

Common mistakes when using amortization calculators

Using APR instead of the interest rate. APR includes fees and gives a higher number than the actual loan rate. Always use the stated loan interest rate, not the APR, in the payment formula.

Forgetting property taxes and insurance. Your actual monthly housing cost includes principal and interest (P&I), property taxes (T), homeowners insurance (I), and possibly private mortgage insurance (PMI). These can add 25-40% on top of the P&I payment shown here. A $1,996 P&I payment on a $300,000 home in a typical market might mean a total monthly housing cost of $2,600-$2,800.

Comparing loans only by monthly payment. A longer term means a lower payment but far more total cost. A $300,000 loan at 7% for 30 years costs $418,527 in interest. The same loan for 15 years costs $185,367 in interest but requires a payment of $2,696 instead of $1,996. The 15-year loan saves $233,000 in interest for an extra $700/month.

Ignoring prepayment penalties. Some mortgages charge a fee if you pay off the loan early. Before making extra payments, check your loan documents for prepayment clauses. Most modern conventional mortgages do not have them, but some private mortgages and older loans do.

Treating the payoff date as fixed. Interest rates on ARM loans change. Life circumstances change. Extra payment amounts change. Treat the amortization schedule as a projection, not a contract.

The bottom line

Amortization calculators give you the information most people did not have when they signed their loans. The monthly payment your lender quoted was just the beginning of the story.

The full picture is: how much total interest will you pay, at what point does the balance decline fast enough to matter, and how much can you save by paying more early.

The answer to the last question almost always surprises people. Small consistent extra payments made early in a loan compound their benefit over the remaining years of interest savings. A $200 extra payment in month 1 saves more interest than $200 extra in month 200, because it eliminates more future compounding.

Use the schedule to understand your loan. Use the extra payment field to find your optimal payoff strategy.