Mortgage Amortization Calculator

What is mortgage amortization?

Amortization is the process of paying off a loan through fixed payments over time. Early on, most of each payment is interest; later, most is principal. On a $340,000 loan at 6.5%, your first payment of $2,149 sends $1,842 to interest and only $307 to principal. By year 20 the split flips — and in the final year almost every dollar reduces your balance. Over 30 years you would pay $433,689 in interest on that $340,000 loan.

How to read the schedule

• Payment — the fixed principal-and-interest amount each month.
• Principal — the part that reduces your balance and builds equity.
• Interest — the lender's charge, calculated on the remaining balance.
• Balance — what you still owe after that payment.

The year-by-year view is the fastest way to see your equity milestones: when you cross 20% equity (PMI removal territory), when half the loan is repaid, and your payoff date.

Why extra payments are so powerful early

Because interest is charged on the balance, principal paid early avoids interest for the entire remaining life of the loan. Adding just $300 a month to the $340,000 loan above pays it off in about 20 years 8 months instead of 30 years and saves roughly $160,000 in interest. Try it in the optional extra-payment field, then compare strategies in the mortgage payoff calculator.

For the full story — including why lenders front-load interest and how amortization differs across loan types — read our guide to understanding amortization.