Mortgage Amortization Calculator

What does this calculator show?

Enter the price of the home, your down payment, the length of the loan and the interest rate, and the calculator returns the fixed monthly principal-and-interest payment. If you tick Include Optionals Below, it also adds the recurring costs of owning a home — property tax, homeowners insurance, private mortgage insurance (PMI), homeowners association (HOA) dues and any other yearly costs — so you see the full amount leaving your bank account each month, not just the loan payment.

Underneath the results you get a complete amortization schedule. The annual view groups twelve payments into one line per year, while the monthly view lists every single payment with its date. The chart beside it draws three lines: the remaining balance falling towards zero, the total interest paid so far, and the total amount paid so far.

Meaning of each field

• Home Price – the purchase price of the property.
• Down Payment – the share of the price you pay up front, as a percentage. The rest is the loan amount. Putting down 20% or more usually avoids PMI.
• Loan Term – how many years you will take to repay; 30 and 15 years are the most common.
• Interest Rate – the yearly rate the lender charges. The calculator divides it by 12 to get the monthly rate.
• Property Taxes – a yearly percentage of the home price set by your local government.
• Home Insurance – the yearly premium protecting the home against damage.
• PMI Insurance – a yearly charge many lenders require when the down payment is below 20%.
• HOA Fee – yearly dues paid to a homeowners association, common for condos and planned communities.
• Other Costs – maintenance, utilities or any other regular yearly home expense you want to include.
• Start Date – the month and year of the first payment; it sets the dates in the schedule and the payoff date.

What is amortization?

Amortizing a loan means breaking it into a series of equal payments spread over a fixed time. Each payment lowers the balance a little, and once the final scheduled payment is made, nothing is owed. Lenders use this method for most consumer loans — home mortgages, car loans and personal loans — and this particular page is tailored to home mortgages.

Every payment has two parts. Interest is the price of borrowing and is calculated as a percentage of whatever balance is still outstanding. Principal is the remainder of the payment, and it is the part that actually reduces the debt.

Because interest depends on the balance, early payments are mostly interest. As the balance shrinks, the interest portion shrinks too, and since the total payment stays the same, the principal portion grows every month. In the last years of a loan almost the entire payment goes to principal. With the default values above, the first payment contains about $2,340 of interest and only $327 of principal; in the final year interest is just $1,185 for the whole year.

Formulas used

Loan amount: L = Home Price × (1 − Down Payment %)

Monthly payment: M = L × r / (1 − (1 + r)⁻ⁿ), where r is the yearly rate ÷ 12 ÷ 100 and n is the number of monthly payments (years × 12). If the rate is zero, M = L ÷ n.

For each month: Interest = Balance × r, Principal = M − Interest, New Balance = Balance − Principal.

Total interest = M × n − L. Monthly property tax = Home Price × tax % ÷ 12; every other optional cost is its yearly amount ÷ 12. Total out-of-pocket = monthly payment + all monthly costs, and its total is that figure × n.

Worked example: a small loan step by step

Take a $20,000 loan repaid over five years at 5%. The monthly rate is 5 ÷ 12 ÷ 100 ≈ 0.004167 and there are 60 payments, so the payment comes to $377.42.

Notice how interest falls from $83.33 to $1.57 while principal rises from $294.09 to $375.85, even though the payment never changes.

Worked example: the default mortgage

A $500,000 home with 20% down leaves a $400,000 loan. At 7.021% over 30 years the payment is $2,666.85. Over 360 payments you pay $960,067.36, of which $560,067.36 is interest — more than the loan itself. Add 1.2% property tax ($500 a month), $2,500 a year of insurance ($208.33) and $5,000 a year of other costs ($416.67) and the true monthly outlay becomes $3,791.85.

Paying off a mortgage sooner

Many owners want to clear their mortgage early to cut interest costs or simply to be debt-free. Lenders, however, earn most of their income from the interest concentrated in the early years, and some contracts limit or charge for early repayment. Always read your loan agreement or ask your lender before using any of the methods below.

Pay a little more every month

Adding even a small amount to each payment sends that money straight to principal. For instance, an extra $50 a month on a $150,000, 25-year loan at 5.45% finishes roughly two and a half years early and saves more than $14,000 in interest. Our Mortgage Payoff Calculator lets you test your own numbers.

Switch to biweekly payments

Paying half the monthly amount every two weeks gives 26 half payments a year — the same as 13 full payments instead of 12. That one extra payment a year can save tens of thousands of dollars; on a $150,000, 25-year loan at 6.45%, the saving is close to $30,000.

Make lump-sum prepayments

A bonus, tax refund or inheritance can be applied directly to the balance. The earlier the lump sum is paid, the bigger its effect, because every later month's interest is calculated on a smaller balance. Lenders may set a penalty, a yearly cap, or a minimum amount for such prepayments, and these rules are normally written into the mortgage contract.

Refinance

Refinancing replaces your current mortgage with a new one, ideally at a lower rate or a shorter term. It requires a new application, underwriting and closing, which bring fees of their own, so compare the total cost carefully before deciding.

Downsides of paying early

Mortgage rates are usually lower than rates on credit cards or personal loans, so extra money may do more good elsewhere: paying off costlier debt first, building an emergency fund, or investing. If your mortgage costs 4% and an investment could earn 10%, the extra mortgage payment carries a real opportunity cost. Prepayment penalties and the loss of a mortgage-interest tax deduction (where it applies) are further costs to weigh.

Tips for reading your schedule

• The point where the green interest line meets the blue balance line shows roughly when you have paid as much interest as you still owe.
• Compare the principal column in year 1 and year 15 to see how strongly repayment accelerates over time.
• Use the monthly view to find your exact balance on a given date, for example before selling or refinancing.
• Change only the term from 30 to 15 years to see how much interest a shorter loan saves, even with a higher monthly payment.

Frequently asked questions

Why is my first payment almost all interest?

Interest is charged on the outstanding balance, which is largest at the start. As the balance falls, the interest share falls with it.

Does the monthly payment include taxes and insurance?

The "Monthly Pay" line is principal and interest only. The table above it adds property tax, insurance, PMI, HOA and other costs to give the total out-of-pocket amount.

Why does the payoff date fall one month after the last payment?

The payoff date is counted as the start date plus the full number of monthly payments, so it marks the month after the final scheduled payment.

When can PMI be removed?

In the US, lenders typically must cancel PMI once the balance reaches 78% of the original home value, and you can usually ask for removal at 80%. The monthly schedule shows when your balance crosses those levels.

Is the result exact?

It uses standard fixed-rate amortization and is accurate for that type of loan. Real loans can differ slightly because of rounding rules, escrow adjustments or rate changes on adjustable loans, so treat it as an estimate and confirm with your lender.

Can I use it for an adjustable-rate mortgage?

Only as a rough guide for the initial fixed period. Once the rate resets, the payment and schedule change.

What is a good down payment?

20% avoids PMI on most conventional loans and lowers the payment, but many buyers put down less. Try different percentages to see how the payment and total interest change.