Loan Amortization Calculator
See how each payment splits between principal and interest over the life of your loan
Base payment: $1,499/mo
360 months · Jun 2056
53.7%
Payment Breakdown
Remaining Balance
PAYMENT INSIGHT
- Principal
- $249
- Interest
- $1,250
- Principal
- $1,491
- Interest
- $7
On a $250,000 loan at 6.0% over 30 years, you'll pay $1,499/month and $289,595 in interest — 53.7% of every dollar goes to the lender, not your equity. Your payment doesn't flip to mostly-principal until month 223 (year 19).
Adding $100/month more saves $51,572 in interest and pays off the loan 54 months early.
What Is Loan Amortization?
This loan amortization calculator shows how fixed monthly payments split between principal and interest over time. Amortization is the process of paying off a loan through equal periodic payments. Each payment covers interest on the remaining balance plus a portion of principal. Early payments are mostly interest; later payments are mostly principal — even though the monthly amount stays the same.
This front-loaded interest structure is why your loan balance barely moves in the first few years. An amortization schedule shows exactly how much of each payment goes to principal versus interest, month by month.
How Monthly Payments Are Calculated
For a fixed-rate loan, lenders use the standard amortization formula to determine your monthly payment:
M = P × [ r(1 + r)n / ((1 + r)n − 1) ]Why Early Payments Are Mostly Interest
Interest is calculated on your remaining balance. On a $250,000 mortgage at 6.0%, month 1 allocates about $1,250 to interest and only $249 to principal. By month 223, the split flips — most of each payment finally attacks the balance.
The stacked chart in this calculator makes this visible: wide red (interest) bars in early years shrink as blue (principal) bars grow. The crossover marker shows exactly when your payment shifts from lender-first to equity-first.
How Extra Payments Change the Math
Extra payments go 100% to principal, which reduces the balance that future interest is calculated on. A $100/month prepayment on a $250,000, 6.0%, 30-year loan can save over $50,000 in interest and cut years off the term — with compounding effect, because less interest means more of each future payment hits principal.
If you have multiple high-interest debts (credit cards, personal loans), compare strategies with our Debt Payoff Calculator — avalanche vs. snowball may save more than prepaying a low-rate mortgage.
Frequently Asked Questions
- What is loan amortization and how does it work?
- Loan amortization is the schedule by which you repay a fixed-rate loan through equal monthly payments. Each payment splits between interest (based on remaining balance) and principal (reducing the balance). Early payments are interest-heavy; later payments are principal-heavy, even though the monthly amount never changes.
- How do I calculate my monthly loan payment?
- Use M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is loan amount, r is monthly rate (annual rate ÷ 12), and n is total months. For a $250,000 loan at 6.0% over 30 years, that's roughly $1,499/month. Drag the sliders above to see your exact payment for any amount, rate, and term.
- Why is so much of my early payment going to interest?
- Because interest equals balance × rate, and your balance is highest at the start. On a 30-year mortgage, roughly 80% of your first payment can be interest. The crossover point — when principal exceeds interest in a single payment — often doesn't arrive until year 18. Extra principal payments accelerate reaching that flip point.
- How much can I save by making extra payments toward principal?
- Depends on loan size, rate, and extra amount. On a $250,000 mortgage at 6.0%, an extra $100/month typically saves $50,000+ in interest and pays off the loan about 4 years early. Use the Extra Monthly Payment slider to see exact savings for your loan — the chart and narrative update in real time.
- What is the difference between loan amortization and debt payoff strategies?
- Amortization applies to a single installment loan with a fixed payment formula. Debt payoff strategies (snowball, avalanche) apply when you have multiple debts with different rates and minimum payments. See our Debt Payoff Calculator to compare which debts to attack first when extra money is limited.
- What is a good prepayment amount for my mortgage?
- Any extra principal payment helps, but consistency matters more than size. On a $250,000 mortgage at 6.0%, even $100/month extra typically saves $50,000+ in interest and pays off the loan about 4 years early. Use the Extra Monthly Payment slider above to find the amount that fits your budget without sacrificing emergency savings.