Amortization Schedule Calculator

How Loan Amortization Works

Amortization is the process of paying off a loan in equal installments. Early payments are mostly interest; later payments are mostly principal.

The payment formula

Monthly Payment = P × r ÷ [1 − (1 + r)⁻ⁿ]

Where P = principal, r = monthly rate, n = total months.

Step-by-step

1. Enter the loan amount, interest rate, and term in years.
2. The calculator computes the monthly payment and total interest.
3. A year-by-year breakdown shows how much of each year's payments go to principal vs interest.

Worked example

$200,000 loan at 6.5% for 30 years. Monthly payment ≈ $1,264. Total interest over 30 years ≈ $255,000. In year 1, only about $2,000 goes to principal — the rest is interest. By year 30, nearly the entire payment goes to principal.

The front-loaded interest problem

Because interest is calculated on the remaining balance, early payments barely reduce the principal. This is why making extra principal payments early in the loan saves dramatically on total interest. Even one extra payment per year on a 30-year mortgage can cut 4–5 years off the term.