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Amortization Calculator

Enter loan amount, interest rate, and term to estimate monthly payment, total interest, total repayment, and how expensive the loan is relative to principal.

Last reviewed May 18, 2026 by ToolSpilo Editorial Team.

Review method: Reviewed against the implemented calculator logic and current CFPB consumer-finance guidance on payments, interest, debt, and borrowing caveats.

For informational purposes only. Not financial, investment, or tax advice. Results are estimates based on the inputs provided. Consult a qualified financial professional before making financial decisions.

Calculator tool

How this calculator works

Use the explanation to understand the formula, assumptions, and practical limits behind the calculator result.

The Amortization Formula

All standard amortizing loans — mortgages, auto loans, personal loans — use the same payment formula:

PMT=P×r(1+r)n(1+r)n−1\text{PMT} = P \times \frac{r(1+r)^n}{(1+r)^n - 1}
  • PP = principal (loan amount)
  • rr = monthly interest rate = annual rate ÷ 12
  • nn = total number of payments = term in years × 12

Each month, the interest portion = remaining balance × rr. The principal portion = PMT − interest. The balance decreases by the principal portion, and next month's interest is lower — this is the amortization curve.

How Each Payment Is Split

Interest in month k=Remaining balancek−1×r\text{Interest in month } k = \text{Remaining balance}_{k-1} \times r

Principal reduction in month k=PMT−Interestk\text{Principal reduction in month } k = \text{PMT} - \text{Interest}_{k}

These two pieces always add back to the fixed payment. Early in the loan the balance is highest, so the interest share is highest too; later payments shift more heavily toward principal.

Worked Example — USD 200,000 Loan at 7% for 30 Years

Monthly rate: r=7%÷12=0.5833%r = 7\% ÷ 12 = 0.5833\%
Payments: n=360n = 360

PMT=200,000×0.005833×(1.005833)360(1.005833)360−1≈$1,330.60\text{PMT} = 200{,}000 \times \frac{0.005833 \times (1.005833)^{360}}{(1.005833)^{360} - 1} \approx \$1{,}330.60
YearInterest Paid (yr)Principal Paid (yr)Balance Remaining
1USD 13,932USD 2,035USD 197,965
5USD 13,588USD 2,379USD 185,744
10USD 12,934USD 3,033USD 168,979
20USD 10,741USD 5,226USD 121,506
30USD 1,484USD 14,483USD 0

Total interest paid: USD 278,616 — nearly 139% of the original loan.

The Interest-First Curve

In month 1: interest = USD 200,000 × 0.5833% = USD 1,166.60; principal = USD 164.00
In month 180 (15 years): interest ≈ USD 691; principal ≈ USD 640
In month 300 (25 years): interest ≈ USD 390; principal ≈ USD 941

The crossover — where principal exceeds interest in each payment — occurs at month 253 (year 21) on this loan. Extra payments in the first years eliminate disproportionate amounts of total interest because they prevent decades of compounding on the reduced balance.

Frequently asked questions

Why do early payments contain so much more interest than principal?

Interest each month is calculated on the outstanding balance — which starts at its maximum and falls slowly. At the start, almost all of a mortgage payment is interest because the balance is near the full loan amount. As principal slowly erodes, each month's interest charge falls and the principal share grows. The total payment stays constant, but its composition shifts continuously from mostly-interest to mostly-principal. This front-loading is why an extra USD 100 in year 1 saves far more total interest than an extra USD 100 in year 25.

How much does one extra mortgage payment per year save?

On a USD 200,000, 7%, 30-year mortgage, making 13 payments per year instead of 12 (one extra payment annually) reduces the loan term by about 4.5 years and saves approximately USD 44,000 in total interest. You can achieve the same effect by splitting your monthly payment in half and paying biweekly — that naturally produces 26 half-payments (13 full payments) per year. Always confirm with your lender that extra payments are applied to principal, not held for the next scheduled payment.

What is a fully amortizing loan vs a balloon loan?

A fully amortizing loan has equal periodic payments that reduce the balance to exactly zero on the final payment date. Mortgages, auto loans, and most personal loans are fully amortizing. A balloon loan uses payments sized for a longer amortization period (e.g., 30 years) but requires the entire remaining balance in a lump sum at a shorter balloon date (e.g., 5 or 7 years). Monthly payments are lower, but the balloon payment creates significant refinancing risk — if rates rise or credit tightens, the borrower may not be able to refinance favorably.

Does it make sense to refinance if rates have dropped?

Refinancing makes sense when the interest savings over your remaining loan life exceed the closing costs (typically 2–5% of the loan balance). A rough rule: divide closing costs by monthly payment savings to get the break-even month. If you plan to stay in the home (or keep the loan) past the break-even point, refinancing saves money. For a USD 300,000 mortgage, dropping from 7.5% to 6.5% saves about USD 200/month. If closing costs are USD 6,000, the break-even is 30 months — worthwhile if you stay for 3+ more years.