Amortization Calculator
Generate a full loan amortization schedule showing principal, interest, and balance breakdown for every payment.
How to Use the Amortization Calculator
- Enter your loan amount (principal) in dollars.
- Input the annual interest rate as a percentage (e.g., 5 for 5%).
- Enter the loan term in years (e.g., 30 for a 30-year mortgage).
- Optionally add an extra monthly payment to see how it accelerates payoff.
- Click Generate Schedule to see a detailed month-by-month breakdown of principal, interest, and remaining balance.
- Use the Payment Summary tab for a quick overview of total payments, interest, and payoff timeline.
Formula & Method
Monthly Payment (Amortization Formula):M = P x [r(1+r)^n] / [(1+r)^n - 1]
Where M = monthly payment, P = principal loan amount, r = monthly interest rate (annual / 12), n = total number of payments (years x 12).
Principal Portion:Principal = M - (Balance x r)
Interest Portion:Interest = Balance x r
New Balance:Balance = Previous Balance - Principal
With Extra Payments:
Extra principal payments reduce the balance faster, which means less interest accrues in subsequent months. The calculator recalculates each month with the reduced balance.
Total Interest:Total Interest = (M x n) - P
Examples
| Loan Amount | Rate | Term | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|---|---|
| $200,000 | 5% | 30 years | $1,073.64 | $186,511 | $386,511 |
| $350,000 | 6.5% | 30 years | $2,212.24 | $446,406 | $796,406 |
| $500,000 | 4% | 15 years | $3,698.44 | $165,719 | $665,719 |
| $150,000 | 7% | 20 years | $1,162.95 | $129,108 | $279,108 |
| $200,000 + $200/mo extra | 5% | 30 years | $1,073.64 + $200 | $118,422 | $318,422 |
Frequently Asked Questions
What is loan amortization?
Amortization is the process of paying off a loan through regular payments over time. Each payment is split between interest (cost of borrowing) and principal (amount borrowed). Early in the loan, most of each payment goes to interest. Over time, more goes toward principal.
How does an extra payment affect my loan?
Even a small extra monthly payment can significantly reduce your total interest and payoff time. For example, adding $100/month to a $200,000 mortgage at 5% saves about $37,000 in interest and pays off the loan 5 years early.
Why does most of my early payment go to interest?
Interest is calculated on your remaining balance. When your balance is high (early in the loan), the interest portion is large. As you pay down principal, the interest portion shrinks and more of each payment goes to principal.
What is the difference between amortization and mortgage calculator?
A mortgage calculator typically shows just the monthly payment. An amortization calculator shows the complete payment-by-payment breakdown of principal, interest, and balance for the entire loan term.
Can I use this for car loans or student loans?
Yes, this calculator works for any fixed-rate installment loan including mortgages, car loans, student loans, and personal loans. Just enter your loan amount, interest rate, and term.
People Also Ask
How is amortization calculated?
Amortization uses the standard loan payment formula: M = P x [r(1+r)^n] / [(1+r)^n - 1]. Each month, the interest portion is calculated as Balance x Monthly Rate, and the rest of the payment goes to principal. The balance decreases each month, so the interest portion shrinks over time.
What is an amortization schedule?
An amortization schedule is a table showing every payment over the life of a loan. It breaks down each payment into principal and interest portions and shows the remaining balance after each payment. This helps borrowers understand exactly how their loan is being paid off.
How much interest will I pay on a $300,000 mortgage?
At 6% interest over 30 years, you will pay approximately $347,515 in total interest, making the total cost of the loan $647,515. At 4% over 30 years, total interest drops to about $215,607. Even a 1% rate difference saves over $130,000 in interest.
Should I pay extra on principal or invest?
Compare your loan interest rate to your expected investment return. If your mortgage is 3% and you expect 7% from investments, investing may be better mathematically. However, paying off debt provides guaranteed returns and peace of mind. Many people do both: invest while making modest extra principal payments.
What happens if I make a lump sum payment?
A lump sum payment reduces your principal balance immediately, which means less interest accrues going forward. You can either reduce your monthly payment (recast) or keep the same payment and pay off the loan faster. Most lenders allow principal-only payments at any time.