Amortization Schedule
Calculate the monthly payment, total payment, and total interest for any fixed-rate loan, and see how each payment is split between principal and interest in an amortization schedule. Enter loan amount, interest rate, and term.
Loan Amortization Schedule Calculator
Amortization Schedule Formula
Where:
- \(M\) — fixed monthly payment
- \(P\) — loan principal (the amount borrowed)
- \(r\) — annual interest rate as a decimal (e.g. 5% = 0.05)
- \(i = r/12\) — monthly interest rate
- \(n\) — loan term in years, so the loan has \(12n\) monthly payments
The monthly payment formula comes from the present value of an annuity: \(M\) is the constant payment whose discounted value at the monthly rate \(i\) exactly equals the principal \(P\). If the interest rate is zero, the payment is simply \(M = P / (12n)\).
Amortization Schedule – Calculation Example
Example: a $250,000 loan at a 5% annual interest rate with a 30-year term (the calculator's default values).
\[ i = \frac{0.05}{12} = 0.0041667 \]
\[ M = 250{,}000 \times \frac{0.0041667}{1 - (1.0041667)^{-360}} = 1{,}342.05 \]
\[ \text{Total Payment} = 1{,}342.05 \times 360 = 483{,}138.00 \]
\[ \text{Total Interest} = 483{,}138.00 - 250{,}000 = 233{,}138.00 \]
Result: the monthly payment is $1,342.05, the total of all 360 payments is $483,138.00, and the total interest paid over 30 years is $233,138.00.
How to Use the Calculator
- Enter the Loan amount — the total sum you are borrowing, before any interest.
- Enter the Annual interest rate — the nominal yearly rate charged by the lender (e.g. 5 for 5%).
- Enter the Loan term in years — how long you have to repay the loan.
- Read the results: the fixed Monthly Payment, the Total Payment over the whole term, and the Total Interest you will pay on top of the principal.
What Is an Amortization Schedule?
An amortization schedule is a table that shows, for every payment of a loan, how much of that payment goes toward interest and how much goes toward reducing the principal, along with the remaining balance after each payment. With a fixed-rate loan, the payment itself stays the same every month — what changes is the split between interest and principal.
Each row of the schedule is built from three simple rules:
\[ \text{Interest}_k = B_{k-1} \times i, \qquad \text{Principal}_k = M - \text{Interest}_k, \qquad B_k = B_{k-1} - \text{Principal}_k \]
where \(B_{k-1}\) is the balance after the previous payment. Because interest is charged on the outstanding balance, early payments are mostly interest, while late payments are mostly principal. For the example loan above, the first two months look like this:
| Payment | Amount | Interest | Principal | Remaining Balance |
|---|---|---|---|---|
| 1 | $1,342.05 | $1,041.67 | $300.38 | $249,699.62 |
| 2 | $1,342.05 | $1,040.42 | $301.63 | $249,397.99 |
Notice that the principal portion grows slightly each month while the interest portion shrinks — the defining feature of amortization. The total interest figure from the calculator is simply the sum of the interest column across all 360 rows.
Understanding this split matters in practice. Because early payments barely reduce the balance, making extra principal payments in the first years of a mortgage or auto loan shortens the loan and cuts total interest dramatically, while extra payments near the end save relatively little. The schedule also explains why borrowers who sell or refinance after only a few years walk away with less equity than they expect.
For a loan with a variable rate, a rate change resets the split: the lender recalculates the payment (or the term) so the remaining balance still amortizes to zero. The figures from this calculator are only guaranteed for fixed-rate, fixed-payment loans such as most mortgages, car loans, and personal loans — see our mortgage calculator and general loan calculator for related scenarios.
Assumptions, Limitations and Practical Tips
- Fixed rate and fixed payment. The calculator assumes the interest rate never changes and payments are made monthly, in equal amounts, on schedule.
- No fees or extras. Closing costs, origination fees, PMI, insurance, and property taxes are not included. For mortgages, the APR gives a fuller cost picture than the nominal rate.
- No extra payments. Additional or larger principal payments reduce total interest below the calculated figure — the schedule shown here is the baseline, not the ceiling.
- Rounding. Real lenders round each payment and each interest charge to the cent, so actual schedules may differ from these figures by a few cents or dollars over the life of the loan.
- Zero-rate loans. If the interest rate is 0%, the calculator divides the principal evenly across all payments, so total interest is zero.
A quick rule of thumb: the longer the term, the lower the monthly payment but the higher the total interest. Comparing the same loan at 15, 20, and 30 years — or comparing rates with the mortgage refinancing rates calculator — is the fastest way to see that trade-off in dollars.
Frequently Asked Questions
How do I build an amortization schedule by hand or in Excel?
Start from the monthly payment \(M\) and monthly rate \(i = r/12\). For each row: interest = previous balance \(\times\) \(i\); principal = \(M\) − interest; new balance = previous balance − principal. In Excel, use =PMT(r/12, 12n, -P) for the payment, then repeat the three formulas row by row. The final balance should come out at (approximately) zero after \(12n\) rows — small leftovers are just rounding.
Why are my early payments mostly interest?
Interest is charged each month on the outstanding balance, which is largest at the start. On a 30-year $250,000 loan at 5%, the first payment is roughly 78% interest. As the balance shrinks, the interest portion of the same fixed payment shrinks too, so a growing share goes to principal. This crossover happens naturally — you do not need to do anything differently in the early months.
Do extra principal payments really save that much money?
Yes, especially early in the loan. Extra payments reduce the balance immediately, so all future interest is calculated on a smaller amount — and every dollar of interest avoided shortens the loan too. On the default $250,000, 30-year, 5% loan, paying an extra $100 per month from month one saves tens of thousands in interest and pays the loan off about 4 years sooner. Extra payments late in the term save far less because most interest has already been paid. Check with your lender that extra payments go to principal, not future payments.
Is a 15-year or 30-year term better?
A 30-year term gives a lower monthly payment but much higher total interest; a 15-year term costs more per month but dramatically less overall. For example, $250,000 at 5% costs about $233,000 in interest over 30 years but only about $105,000 over 15 years. The 15-year option only works if you can comfortably afford the higher payment — a good rule is to keep total housing debt well within your budget. Many borrowers take the 30-year loan and voluntarily pay extra, which offers flexibility.
What's the difference between interest rate and APR?
The interest rate (what this calculator uses) determines your monthly payment. The APR also folds in lender fees, points, and some closing costs, expressed as a yearly rate, so it reflects the true cost of borrowing. Two loans with the same interest rate can have different APRs if their fees differ. When comparing mortgage offers, compare APRs; when calculating your payment and amortization schedule, use the nominal interest rate.
Does this schedule work for adjustable-rate (ARM) or interest-only loans?
No. This calculator assumes a fixed rate and fixed payment for the entire term. With an adjustable-rate mortgage, the rate resets periodically and the lender recalculates the payment so the balance still reaches zero — so the split changes at each reset. With interest-only loans, early payments do not reduce principal at all (the balance stays flat), which this schedule does not model. Use it for fixed-rate mortgages, auto loans, and most personal loans.
Why does my lender's schedule differ slightly from this calculator?
Small differences come from rounding and timing. Lenders round each payment and interest charge to the cent, may use daily interest accrual instead of monthly, or charge from a different closing date. Over hundreds of payments these differences add up to a few cents or dollars per figure. If the discrepancy is large, check whether you entered the term correctly (years, not months) and whether your quoted rate is the nominal rate rather than the APR.