Mortgage Amortization Calculator

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How mortgage amortization works

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Last updated 09/03/2024

Amortization is the process by which a mortgage gets paid off. Amortization helps lenders reduce their risk and more accurately forecast the money they have coming in each month. Even though each payment on a fixed-rate loan is the same, the proportions of the payment that go toward principal and interest change over time. At the beginning of the loan's term, most of each payment goes toward interest. Over the years, that ratio shifts, and by the last years of the mortgage, payments are going almost entirely to principal.

For example, let's say you got a $300,000 mortgage for 30 years with an interest rate of 6.5%. Your monthly principal and interest payments will be $1,896, but…

In your first payment, $271 will go toward the principal and $1,625 to interest.
Jump ahead 10 years. Now $519 goes to the principal and $1,378 to interest.
By the second-to-last payment, $1,876 goes to principal and just $20 goes to interest.

Using the amortization calculator

An amortization calculator enables you to see how much interest and principal (the debt) paid will be in any month of your loan. To use our mortgage amortization calculator, simply add your details to the following fields:

Loan amount
Mortgage interest rate
Loan term, in years
Starting month and year

Filling in these fields will show your amortization schedule. You can see how the proportion of your monthly payment going to principal versus interest will change over time.

You can also use the amortization schedule to look at how much interest you'll pay over the life of the loan or over a specific period, as well as how much principal you'll still owe at any given time.

Can I use this mortgage amortization calculator for an adjustable-rate mortgage?

Probably not. The initial fixed interest rate term on an adjustable-rate mortgage would be represented well on an amortization schedule. But once that term ends and the interest rate starts to adjust up or down, the schedule can't properly account for future interest rate adjustments.

Any amortization schedule for an ARM beyond the initial fixed term is really just an estimate and subject to substantial change.

Why does it take so long to pay down my principal?

The simple answer is: The lender gets paid first. In the early years of your mortgage, your monthly loan payment is heavily weighted to paying interest. Just a tiny reduction of the principal loan balance occurs with each payment at this stage. The rest of your payment often goes to insurance, taxes and other expenses wrapped into the monthly amount due.

As years pass, you’ll begin to see more of your payment going to principal — a greater amount is reducing the debt and less is being spent on interest.

How can I pay less interest on my mortgage?

Making additional, principal-only payments can help chip away your principal in the early years of your loan. Most mortgage lenders and servicers will allow you to add additional funds to your monthly payment; the key is to make sure you designate it as going toward the principal.

Because the amount of interest paid is based on the principal still owed — that's compounding interest for you — reducing your principal even a little will lower your total interest paid over the life of the loan.

Test out some scenarios using NerdWallet’s early mortgage payoff calculator, which lets you see how much additional principal you would need to pay each month to chop the desired number of years off your loan's term.

Another option? If prevailing interest rates are lower than when you took out your mortgage, you could do a rate-and-term refinance to get a lower interest rate. Because refinances come with closing costs — often 2% to 6% of the loan amount — you'll want to be confident that you'll keep living in your home long enough to see savings. But getting a lower interest rate on what's now a smaller loan amount could make your amortization schedule a little less scary. Run the numbers with our refinance calculator to see what you might save.

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