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Your monthly mortgage payment comes from a formula: M = P × [r(1+r)^n] / [(1+r)^n - 1]. P is the loan amount, r is the monthly rate (annual rate ÷ 12), and n is total payments (years × 12). It spits out a fixed payment that pays off every penny by the end of the term. Simple enough. What surprises people is how that payment breaks down. On a 30-year, $280,000 loan at 6.5%, your first payment is roughly 86% interest and only 14% principal. You feel like you're treading water. By year 15 it's about 50/50, and in the final years nearly everything goes to principal. My brother bought his first house in 2019 and called me panicked after seeing his first amortization statement — "I'm basically just paying interest!" Yeah. That's how it works at first. Stick with it.

Extra payments go 100% toward principal. Every dollar you add saves you interest for the remaining life of the loan. Adding $200/month extra on that $280K loan at 6.5% saves roughly $76,856 in interest and pays it off more than 5 years early. Compound interest working for you instead of against you, for once.

We generate a full amortization schedule — month by month, principal vs interest, remaining balance. For a detailed walkthrough, check the CFPB mortgage resources. Key things to keep in mind:
- Recommended housing cost ratio: no more than 28% of gross income
- 20% down payment avoids PMI entirely
- Common loan terms are 15, 20, or 30 years
- Even small extra payments make a big difference over 30 years

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