Amortization Calculator

This calculator shows how a mortgage balance falls over time and how each payment is divided between principal and interest.

Amortization is the process of paying off a loan through regular payments. Principal is the part of each payment that reduces the amount you still owe, while interest is the cost of borrowing the money.

Early in the mortgage, the balance is still high, so more of each payment usually goes toward interest. As the balance falls, less interest is charged and more of the payment goes toward principal. In a typical fixed-rate mortgage, the combined principal-and-interest payment stays level even though this split changes over time.

Extra payments made toward principal reduce the balance faster. Because future interest is calculated using a smaller balance, extra payments may shorten the loan term and reduce the total interest paid.

An amortization schedule shows this payment breakdown month by month. Taxes and insurance may appear on a mortgage bill, but they do not reduce the loan balance.

Key takeaway

Your monthly payment may stay the same, but the way it is divided changes over time. Early payments usually include more interest. Later payments usually include more principal.

Helpful terms

Amortization

The month-by-month process of paying off a loan.

Principal

The part of the loan balance you still owe.

Loan term

The planned amount of time you have to pay back the loan.

Source: CFPB explanation of mortgage amortization.