Amortization Calculator
What is an Amortization Calculator?
Amortization is the process of paying off a loan through regular, equal payments. Each payment is split between interest and principal, and the balance shrinks slowly at first before accelerating. An amortization calculator shows your monthly payment and a complete schedule of every payment over the life of the loan.
Enter your loan amount, interest rate, term and the date of your first payment. The calculator returns your monthly payment, total interest, total cost, and a month-by-month schedule for the first year showing exactly how much of each payment goes to interest versus principal and your remaining balance.
Frequently Asked Questions
How do you calculate an amortization schedule?
Each month, interest is calculated on the remaining balance at the monthly rate (annual rate ÷ 12). The rest of your fixed payment goes to principal. As the balance drops, the interest portion shrinks and the principal portion grows until the loan is paid off.
How much interest do I pay in the early years?
A lot. On a 30-year $300,000 mortgage at 6.5%, about 80% of your first payment goes to interest. Over the full term you pay roughly $382,000 in interest - more than the original loan. Paying extra early reduces this dramatically.
What is the difference between amortization and simple interest?
Amortized loans recalculate interest each month on the remaining balance, so interest decreases over time. Simple interest is calculated once on the original principal for the whole term and is more common on short-term loans.