I Built This to Make
Loan Amortization Finally Make Sense

An amortization calculator is a tool that shows you how your loan payments are split between principal and interest over time. It calculates your monthly payment, total interest paid, and creates a complete schedule showing exactly how much of each payment goes toward principal versus interest at every point throughout your loan. I built this one to be super easy to use—you just enter your loan amount, interest rate, and term, and it instantly shows you the full picture.

The formula for monthly payment is: M = P × [r(1+r)^n] / [(1+r)^n – 1], where M is your monthly payment, P is the principal loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments. Then each month, calculate interest = remaining balance × r, principal = M – interest, and new balance = old balance – principal. Sound complicated? That's why I built this calculator—it does all the math instantly!

Amortized loans have fixed payments that stay the same (even though the principal/interest split changes). Each payment covers the interest due plus some principal, ensuring the loan is fully paid off by the end of the term. Simple interest loans might have variable payments or interest calculated differently. Most mortgages, auto loans, and personal loans are amortized. The key is: your payment is the same every month, and the loan is fully paid off by the end of the term.

Because your balance is highest at the start. Interest is calculated on your current outstanding balance. In month 1, you owe the full loan amount, so interest is highest. As you pay down principal, there's less balance to charge interest on. That's why on a 30-year mortgage, your first payment might be 80% interest, but your last payment is only 5% interest. This is also why extra payments early in the loan are so powerful—you're reducing the balance when interest calculations are highest.

Yes, you can almost always pay off an amortized loan early! Every dollar you pay above the minimum goes straight to principal (assuming no prepayment penalty). This reduces future interest and shortens your loan term dramatically. However, some loans DO have prepayment penalties—usually 1-5% of the remaining balance if you pay off within the first 3-5 years. Check your loan agreement or call your lender to ask. If there's a penalty, do the math: sometimes paying it off early is still worth it despite the fee.

More than you'd think! On a $300k mortgage at 6.5% for 30 years, paying just $100 extra/month saves you $92,000 in interest and pays off your loan 5 years early. A one-time $10k payment in year 5 saves $71,000 and 5 years. Even $50 extra/month saves $50k+. The earlier you make extra payments, the bigger the impact, because you're reducing the balance when interest is highest. Use the calculator above to see how extra payments would affect your specific loan.

This is the classic debate, and the answer depends on your situation. If your loan rate is 6.5% and you can earn 8% investing, you might come out ahead investing (after taxes and risk). But guaranteed returns from paying debt are—well, guaranteed. Many people do both: get employer 401(k) match (that's free money), then split extra money between debt payoff and investing. Also consider the psychological benefit of being debt-free. There's no one right answer—do what helps you sleep at night.

Late fees pile up, your credit score drops (potentially by 100+ points), and you might fall behind on the amortization schedule. If you catch up quickly (within 30 days), you can usually get back on track with minimal damage. But if you miss multiple payments, the lender might start foreclosure or repossession proceedings. If you're struggling, contact your lender immediately—many have hardship programs that can temporarily reduce or pause payments. Don't wait until you're months behind.

Biweekly payments are my favorite hack! Instead of paying $1,800 once a month, you pay $900 every two weeks. Since there are 52 weeks in a year, you make 26 half-payments = 13 full payments per year instead of 12. That one extra payment per year shaves 4-5 years off a 30-year mortgage and saves $70k+ in interest. Just make sure your lender applies payments correctly—some hold biweekly payments and only apply them monthly, which defeats the purpose.

Your amortization schedule is the original plan—what you'd pay if you made exactly the minimum payment every month for the entire loan term. Your monthly statement shows what you actually paid that month and your current remaining balance. If you've made extra payments, your statement balance will be lower than the original schedule predicted. Think of the schedule as the 'planned route' and your statement as 'where you actually are' on the journey.

Yes! If you make extra payments, refinance, or modify your loan, your schedule changes. Extra payments accelerate payoff—you'll finish earlier than the original schedule. Refinancing creates a completely new schedule with a new rate and term. Some lenders will send you an updated schedule after changes, but many don't. That's why calculators like this are useful—you can see how extra payments or different terms affect your payoff date and total interest.

Negative amortization is scary stuff. It happens when your payment is so small that it doesn't even cover the interest due. The unpaid interest gets added to your principal, so your loan balance actually INCREASES over time instead of decreasing. This was common with 'option ARM' loans before the 2008 financial crisis. People made minimum payments that didn't cover interest, their balance grew, and they ended up owing MORE than they originally borrowed. Avoid loans with negative amortization like the plague.

It depends on your priorities. 15-year mortgages have lower rates (usually 0.5-0.75% less) and you pay way less interest. On a $300k loan at 6.5%, a 15-year mortgage costs $170k in interest vs. $383k for a 30-year—you save $213k! But monthly payments are much higher ($2,600 vs. $1,900). 30-year gives flexibility—you can pay extra when you want, but fall back to the lower payment if money is tight. Many people get a 30-year but make payments like it's a 15-year—best of both worlds.

Very accurate! I use the standard amortization formula that banks and lenders use. For fixed-rate loans with regular monthly payments, you can trust these numbers. However, real life has some variables: rounding differences, payment processing dates, fees (closing costs, PMI, etc.), and rate changes for adjustable loans can make actual numbers vary slightly. Think of this as a planning tool that gives you an excellent estimate, not a crystal ball. For major financial decisions, verify with your lender.

No! Fixed-rate loans amortize on a predictable schedule. Adjustable-rate mortgages (ARMs) recalculate every time the rate changes, so your payment and schedule can shift. Interest-only loans don't amortize during the interest-only period. Balloon loans have a huge payment at the end. Credit cards don't amortize at all—you can carry a balance indefinitely. This calculator is designed for standard amortizing loans with fixed rates and regular payments. If your loan is different, talk to your lender about your specific situation.

Loan recasting is when you make a lump sum payment (say $20k), and the lender reamortizes your loan over the remaining term at the same rate. This lowers your monthly payment without refinancing. Example: You have 25 years left on a $300k mortgage, pay $20k lump sum, they recast it as a $280k loan over 25 years at the same rate. Your payment drops. Fees are usually low ($200-500). It's great if you inherited money or got a bonus but want to keep monthly payments manageable. Note: not all lenders offer this, and it's different from refinancing (which changes your rate).

The math is the same, but the strategy is different! For your primary home, you might prioritize paying it off for security and peace of mind. For investment properties, many investors prefer 30-year terms and minimum payments to maximize cash flow and tax deductions. Mortgage interest on rental properties is fully tax-deductible, so there's less incentive to pay off early. Some investors even want amortization to slow down—they'd rather put extra money into a new property than pay off an existing one. It depends on your investment strategy.

Use it! Print it out, save it as a PDF, keep it handy. Review it annually to see your progress. Plan extra payments around it—I like to highlight the row where I'll be debt-free if I stick to my plan. Share it with your spouse or financial advisor. Use it to make 'what-if' decisions: what if I refinance? What if I pay $200 extra? What if I get a bonus? Your amortization schedule is a roadmap—use it to navigate toward your debt-free destination.

Absolutely! This calculator works for any amortizing loan with a fixed rate and regular payments. Car loans (usually 3-7 years), personal loans (1-5 years), student loans (10-25 years), mortgages (15-30 years), home equity loans, boat loans—just enter the loan amount, interest rate, and term. The calculator will show you the exact amortization schedule. Note: federal student loans have unique features like income-driven repayment and forgiveness options, so this calculator is most useful for private student loans or refinanced student loans.

Here's the formula: Closing Costs ÷ Monthly Savings = Months to Break Even. Example: Refinancing costs $4,000 and lowers your payment by $200/month. $4,000 ÷ $200 = 20 months to break even. If you plan to stay in the home longer than 20 months, refinancing makes sense. But also consider: are you extending the term? If you refinance a 30-year into another 30-year, you're resetting the clock. Better to refinance into a shorter term (25, 20, or 15 years) to stay on track. Use this calculator to compare your current loan vs. refinance options.

PMI (Private Mortgage Insurance) is typically required when you put down less than 20% on a conventional mortgage. It usually costs 0.5-1.5% of the loan amount per year, added to your monthly payment. PMI doesn't amortize—you pay it until you reach 20% equity, then it drops off. For a $300k loan with 10% down, PMI might be $150/month. Once you hit 20% equity (through paying down principal or home value appreciation), you can request PMI removal. That drops your payment by $150/month automatically. Track your equity on your amortization schedule so you know when to request PMI cancellation.

For most borrowers, the big tax implication is the mortgage interest deduction. You can deduct mortgage interest on up to $750k of mortgage debt (or $1M if you bought before 2018). In the early years of a mortgage, most of your payment is interest, so your deduction is huge. As time goes on and more goes to principal, your deduction shrinks. This means your tax benefit decreases over time, which is why some financial advisors recommend NOT paying off a low-rate mortgage too quickly—you lose that tax deduction. Consult a tax pro for your specific situation.