Amortization Calculator
Monthly payment · Full amortization schedule · Principal vs interest chart · Extra payment savings · CSV export · 20 currencies
What Is Amortization?
The Amortization Formula
The monthly payment for a fully amortized loan is calculated using this formula, which ensures the loan balance reaches exactly zero on the final payment:
How Each Payment Is Broken Down
For each monthly payment, the interest and principal portions are calculated as follows:
Real Example: First 3 Payments on $200,000 at 6% for 15 Years
| Payment # | Balance Start | Interest (0.5%) | Principal | Balance End |
|---|---|---|---|---|
| 1 | $200,000.00 | $1,000.00 | $687.71 | $199,312.29 |
| 2 | $199,312.29 | $996.56 | $691.15 | $198,621.13 |
| 3 | $198,621.13 | $993.11 | $694.61 | $197,926.53 |
| … | … | decreasing each month | increasing each month | … |
| 180 | $1,679.30 | $8.40 | $1,679.30 | $0.00 |
Notice how the interest decreases and the principal increases by nearly the same amount each month. By the final payment, almost all of the $1,687.71 goes to principal with only $8.40 in interest.
Extra Payments: How Much Do They Really Save?
The most powerful way to reduce the total cost of a loan is to make extra principal payments - especially early in the loan. Here's why early extra payments are so effective: they eliminate months of future interest, each of which would be calculated on a still-high balance.
Extra Payment Impact on a $200,000 Loan at 6% (15 Years)
| Extra Monthly Payment | Interest Saved | Months Saved | Paid Off |
|---|---|---|---|
| $0 (no extras) | baseline | - | 180 months |
| $50/month | ~$4,900 | ~6 months | 174 months |
| $100/month | ~$9,400 | ~11 months | 169 months |
| $200/month | ~$17,200 | ~20 months | 160 months |
| $500/month | ~$36,000 | ~44 months | 136 months |
| $5,000 one-time (month 1) | ~$2,800 | ~3 months | 177 months |
When to Make Extra Payments
- As early as possible - month 1 extra payments save the most because they eliminate the highest-balance interest charges
- When you have a windfall - tax refund, bonus, inheritance. A single large payment can save years of interest
- Consistently, even small amounts - $50/month extra is better than $600/year extra if you can sustain it
- Check for prepayment penalties - some loans (especially mortgages written before 2014) charge a fee for early payoff. Read your loan agreement
Amortization Schedule: Understanding the Table
This calculator generates a complete amortization schedule with the following columns:
- Payment # / Date: The sequential payment number and calendar date
- Payment: The total regular monthly payment (principal + interest)
- Interest: The portion going to the lender (balance × monthly rate). Decreases each month
- Principal: The portion reducing your loan balance. Increases each month
- Extra: Any additional payment applied directly to principal that month
- Balance: Remaining loan balance after this payment
- Equity: Total principal repaid so far (original loan - current balance)
Year-End Summary Rows
The schedule highlights year-end rows in blue, making it easy to see annual totals. Switch between Monthly and Yearly views using the tabs above the table. The Yearly view shows annual totals for each column - useful for tax purposes (mortgage interest is typically tax-deductible in the US).
Negative Amortization (What to Avoid)
Negative amortization occurs when monthly payments are less than the interest charged, causing the balance to grow instead of shrink. This is rare with standard fixed-rate loans but can occur with certain adjustable-rate mortgages (ARMs), income-based student loan repayment plans, or minimum payments on revolving credit. This calculator only handles fully amortizing loans - loans that fully pay off within the term.
15-Year vs 30-Year vs Interest-Only: Full Comparison
Loan term is the single biggest factor in total interest paid:
| Loan Type | Monthly Payment | Total Interest | Total Paid | Interest as % of Total |
|---|---|---|---|---|
| $200k at 6% - 10 years | $2,220 | $66,400 | $266,400 | 25% |
| $200k at 6% - 15 years | $1,688 | $103,788 | $303,788 | 34% |
| $200k at 6% - 20 years | $1,432 | $143,630 | $343,630 | 42% |
| $200k at 6% - 30 years | $1,199 | $231,676 | $431,676 | 54% |
A 30-year loan costs $127,888 more in interest than a 15-year loan on the same $200,000 principal. The monthly payment difference is only $489/month - but over 30 years, that choice compounds into a massive interest cost difference.