Mortgage Amortization Calculator

Understanding Mortgage Amortization

A mortgage amortization calculator helps you understand how your loan payments are structured over time. It shows you exactly how much of each payment goes toward principal and interest, helping you make informed financial decisions about your mortgage.

What is Mortgage Amortization?

Mortgage amortization is the process of paying off a loan through regular monthly payments over a predetermined period. Each payment consists of both principal (the amount borrowed) and interest (the cost of borrowing). Our calculator provides several key benefits:

Complete payment breakdown showing principal vs. interest for each month
Total interest cost over the life of the loan
Remaining balance after each payment
Visual representation of how payments change over time

How to Calculate Mortgage Amortization

Mortgage amortization calculations use a standard formula that considers the loan amount, interest rate, and loan term. The monthly payment is calculated using:

M = P [ r(1 + r)^n ] / [ (1 + r)^n – 1 ]

Where M = Monthly Payment, P = Principal Loan Amount, r = Monthly Interest Rate, and n = Total Number of Payments. Early payments consist mostly of interest, while later payments apply more toward principal.

Frequently Asked Questions

How does mortgage amortization work?

Mortgage amortization spreads your loan payments over a fixed period. Early payments consist mostly of interest, while later payments apply more toward the principal balance. This creates a predictable payment schedule.

Why do early payments have more interest?

Interest is calculated on the remaining loan balance. Since the balance is highest at the beginning of the loan, more of your payment goes toward interest. As you pay down the principal, the interest portion decreases.

Can I pay off my mortgage early?

Yes, making extra principal payments can significantly reduce the total interest paid and shorten your loan term. Even small additional payments can save thousands of dollars over the life of the loan.

How accurate is this calculator?

Our calculator provides accurate estimates based on the standard amortization formula. However, actual payments may vary slightly due to rounding, insurance, taxes, or other fees not included in the basic calculation.