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Amortization Calculator

Free amortization calculator: full yearly schedule, cumulative interest chart and how extra payments change your payoff date. See why interest is front-loaded.

Last reviewed: January 2026 · Tax data verified against IRS Publication 15-T & state revenue departments

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How This Calculator Works

Amortization is the system that turns a lump of debt into a schedule of identical payments. Your payment M = P x [r(1+r)^n] / [(1+r)^n - 1] stays level, but the split inside it moves every month: interest is charged on whatever balance remains, so early payments are mostly interest and late payments are mostly principal. This calculator prints the entire year-by-year schedule and draws the cumulative-interest curve so you can watch the machine work.

The default example makes the front-loading vivid: $300,000 at 6.5% for 30 years has a $1,896.20 payment, and payment 1 splits into $1,625.00 of interest (85.7%) and just $271.20 of principal. Across year one you pay $19,401.27 of interest against only $3,353.18 of principal. The principal share does not overtake the interest share until month 233 — year 19.4 of 30.

Here is the statistic that surprises everyone: on that same loan you cross the halfway point of ALL interest paid around month 127, barely past year 10, while still owing about $250,600. And after ten years of paying $227,544.49, you have retired only $45,671.62 of principal. Amortization front-loads the lender's compensation and back-loads yours — which is precisely why early extra principal is the strongest lever in personal finance.

Extra payments bend the curve in a way no other move can. Adding $100 per month to the default loan retires it in 312 months — 4 years early — and saves $60,994.79 in interest. Adding $200 finishes in 277 months (6 years 11 months early) and saves $103,448.79. Even one extra payment per year, applied monthly as $158.02, cuts the term to 290 months and saves $87,257.51. The comparison panel above converts your extra amount into months saved, interest saved and a payoff date.

Term choice is the other big dial. A 15-year loan at 6.5% on $300,000 costs $2,613.32 per month with $170,397.98 total interest; the 30-year costs $1,896.20 with $382,633.47 — a $212,235.49 difference. The honest compromise many borrowers choose: take the 30-year for the lower required payment, then pay the 15-year-sized payment voluntarily. You keep the safety valve and capture most of the savings. For loan-specific versions, see the mortgage calculator and auto loan calculator.

How It's Calculated

Formula

M = P x [r(1+r)^n] / [(1+r)^n - 1]; each month: Interest = Balance x r, Principal = M - Interest

Step-by-Step

  1. 1Set the principal P, the annual rate (APR) and the term in months n = years x 12.
  2. 2Compute the monthly rate r = APR / 12 (6.5% APR gives r = 0.0054167).
  3. 3Compute the level payment M = P x [r(1+r)^n] / [(1+r)^n - 1] (or P / n when the APR is 0).
  4. 4For each month: Interest = Balance x r; Principal = M - Interest; add any extra payment to Principal.
  5. 5Subtract Principal from the Balance and repeat monthly until the Balance reaches zero.
  6. 6Group the monthly rows into loan years for the yearly table; cumulative interest is the running sum of the interest column.

Example

$300,000 at 6.5% APR for 30 years (360 payments): r = 0.0054167 and M = $1,896.20. Payment 1 is $1,625.00 interest + $271.20 principal. Total interest over the full term is $382,633.47 and total paid is $682,633.47. Adding $200 per month extra retires the loan in 277 months — 6 years 11 months early — and saves $103,448.79 in interest.

For detailed data sources and full methodology, see our Methodology & Data Sources page.

Key Rates & Data for 2026

30-year fixed mortgage (typical 2026 range)

~6% - 7%

15-year fixed mortgage (typical 2026 range)

~5.5% - 6.5%

Payment per $1,000 @ 6.5% / 30 yr

$6.32

Payment per $1,000 @ 7% / 30 yr

$6.65

Year-1 interest share @ 6.5% / 30 yr

~85%

One extra payment per year ($300K @ 6.5%)

~5 yr 10 mo faster

Frequently Asked Questions

What does amortization actually mean?

Amortization is paying off a loan in scheduled, level installments, with each payment split between interest and principal. The payment is fixed — $1,896.20 on a $300,000 loan at 6.5% for 30 years — but the split moves: interest is computed each month on the remaining balance, so as the balance falls, the interest share falls and the principal share rises by exactly the same amount. 'Amortized' is the opposite of 'interest-only' or 'revolving': there is a first payment, a last payment, and a mathematically guaranteed zero balance at the end. Every fixed-rate mortgage, auto loan and standard personal loan amortizes on this exact pattern.

Why is so much of my early payment just interest?

Because in month one you owe the entire principal, and interest is simply rate times balance. On $300,000 at 6.5%, one month of interest is $300,000 x 0.065 / 12 = $1,625.00 — which is 85.7% of the $1,896.20 payment, leaving only $271.20 for principal. In year one the totals are $19,401.27 interest versus $3,353.18 principal. This is not a penalty or a billing trick; it is the only split that keeps the payment level while the balance declines. The practical consequence: extra principal in the early years removes the most future interest per dollar, because it shrinks the balance that all later interest is computed on.

When does principal overtake interest on a 30-year loan?

On the classic $300,000 at 6.5% for 30 years, the principal share of the payment exceeds the interest share at month 233 — about 19.4 years in. Higher rates push the crossover later; lower rates pull it dramatically earlier (at 3%, it happens around year 7). A related milestone: you cross the halfway point of TOTAL interest around month 127, barely past year 10, while still owing roughly $250,600. Run your own rate in the calculator and watch the interest-share column in the yearly table — the month it drops below 50% is your loan's crossover.

How much do extra payments really save on a 30-year loan?

On $300,000 at 6.5% for 30 years: an extra $100 per month pays off in 312 months — 4 years early — and saves $60,994.79 in interest. An extra $200 per month finishes in 277 months, 6 years 11 months early, saving $103,448.79. An extra $300 saves $135,115.17 and about 9 years 2 months. The savings are so large because of compounding in reverse: every dollar of extra principal eliminates interest on that dollar for the entire remaining term. The payoff panel above turns your extra amount into exact months saved, interest saved and payoff dates — try $25 increments to see how even small amounts matter.

What happens if I make one extra mortgage payment per year?

The popular 'pay an extra payment annually' tactic works, but most people overestimate it. On $300,000 at 6.5% for 30 years, splitting one extra $1,896.20 payment into $158.02 per month retires the loan in 290 months instead of 360 — 5 years 10 months early — and saves $87,257.51 in interest. That is a real win, but notice that a single extra payment per year is worth less than $200 per month every month ($103,448.79 saved). If a lump-sum discipline is easier for you, schedule one extra payment each January and confirm the servicer applies it to principal, not to next month's installment.

How do I read an amortization schedule?

Each row is one payment period; the columns you care about are interest, principal and remaining balance. Follow any single row: interest + principal = your payment, and the new balance = old balance - principal. In the yearly view this calculator adds an interest-share column, so you can see the amortization curve at a glance — 85.3% interest in year one on the default $300,000 loan, sliding toward zero by the final year. Lenders print the monthly version of this table at closing; ours aggregates it by year so the front-loading pattern is visible. A useful audit: sum the interest column and confirm it matches the total-interest figure you were quoted.

Should I choose a 15-year or a 30-year amortization term?

On $300,000 at 6.5%: the 15-year payment is $2,613.32 with $170,397.98 total interest; the 30-year is $1,896.20 with $382,633.47 — a $212,235.49 difference, and 15-year rates typically run a bit lower too. The pure-math answer is 15 years. The practical answer for most households: take the 30-year and voluntarily pay extra, which reproduces most of the interest savings while preserving the right to drop back to the lower payment if income hiccups. What you should almost never do is take the 30-year and pay only the minimum while carrying higher-rate debt elsewhere — retire expensive debt first, then throw the surplus at the mortgage.

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<a href="https://thetaxcalc.com/amortization-calculator" title="Amortization Calculator 2026 — Yearly Schedule & Interest Savings">Amortization Calculator 2026 — Yearly Schedule & Interest Savings</a>

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