Amortization Calculator

When you’re talking about a mortgage, amortization refers to paying off your home loan debt over time. At the start of your loan most of your payment will be allocated to interest. This shifts gradually over the life of your loan until you will pay more toward the principal balance as your loan moves closer to being paid off. 

A fixed-rate mortgage has equal monthly payments of principal and interest over the entire loan term. An adjustable-rate mortgage (ARM) has monthly payments that may increase or decrease (after an initial fixed-rate period) depending on the index used to set the interest rate. 

As the share of your payments dedicated to principal increases, you’ll be building more equity in your home. This creates a resource you can tap into if you want to take cash out with a refinance home equity line of credit (HELOC) or home equity loan. 

If you’re a homebuyer, you can use this amortization calculator and schedule to understand the long-term costs of buying a home. If you’re a homeowner, you can use it to evaluate a refinance or make mortgage payment decisions that could shorten the length of your loan and potentially save a significant amount of money in interest. You can do this by paying down your mortgage with additional payments allocated to principal. You’ll need to make sure your loan doesn’t have a prepayment penalty or any other fees related to an early payoff. 

Negative amortization occurs when your monthly mortgage payments don’t cover all the interest due. The amount that isn’t covered is added to the unpaid principal balance, so you’re essentially paying interest on interest. As a result, you could make payments but owe more than you did at the start of the loan. You can avoid negative amortization by staying current with your monthly mortgage payments. 

Complete the information in the amortization calculator: 

• Enter your home price 
• Enter your down payment (the percentage will calculate automatically) 
• Use the drop-down menu to choose your loan term in years 
• Enter your interest rate

Click the CALCULATE button. 

The display will show you two options: A payment breakdown and the loan amortization.

1. The payment breakdown chart is interactive.You’ll see the relationship between principal, interest and loan balance by moving your cursor along the year axis at the bottom of the chart.

   You can find out what effect additional principal payments will have by completing the Optional: Make extra payments information:

   – Enter the loan start date and choose your additional payment type:
   – Monthly amount
   – Yearly amount — choose the month from the drop-down menu
   – One-time payment amount — choose the date for the payment 

2. The full amortization schedule breakdown will display the amount of principal and interest in each scheduled mortgage payment. Click the arrow to the right of the remaining balance amount for any year to see the monthly payments.

   As you can see, this calculator is a powerful tool to analyze your mortgage payments and the effect of additional payments on your loan. 

Think of your amortization schedule as a countdown to your debt repayment. It shows you every scheduled loan payment, listing the allocation of the payments every month and the declining balance on your debt until it reaches zero. Initially you’ll see that most of your payment goes to interest, but because the interest is calculated on the principal balance, and that balance decreases with every payment, more of your payment will be allocated to the principal until you complete your payments at the end of your loan term.  

Amortization calculators are not just for homebuyers. If you’re a homeowner, you can use the calculator to run different financial scenarios and see what mortgage changes might make sense for you. For example, you could look at refinancing scenarios, including different loan amounts, rates or loan terms. You can also see the effect of making additional principal payments on a monthly, annual or one-time basis. You can enter different amounts to see their impact on the amount of interest you’ll pay and how early you might pay off your mortgage.