Where each mortgage payment goes
A fixed-rate mortgage payment never changes, but what it pays for does. In the early years most of it is interest; by the end almost all of it reduces the balance. An amortization schedule shows that shift year by year, and this calculator lets you jump to any year to see what you still owe.
The formulas
- Monthly payment = P × r ÷ (1 − (1 + r)⁻ⁿ), with P the loan amount, r the monthly rate (annual rate ÷ 12) and n the number of payments.
- Balance after m payments = P × (1 + r)ᵐ − payment × ((1 + r)ᵐ − 1) ÷ r
- Interest paid so far = payment × m − (P − balance).
The payment shown covers principal and interest only. Property tax, homeowners insurance and any PMI usually come on top through escrow.
Worked example: $350,000 over 30 years at 6.5%
- Monthly payment: $2,212.24.
- After 5 years, you still owe $327,638: only 6.4% of the loan is repaid.
- During year 5, you pay $21,477 of interest and $5,070 of principal.
- Over the full 30 years, interest totals $446,406, more than the amount borrowed.
Schedule by year
| Year | Balance at year end | Interest that year | Principal that year | Interest to date |
|---|---|---|---|---|
| 1 | $346,088 | $22,635 | $3,912 | $22,635 |
| 5 | $327,638 | $21,477 | $5,070 | $110,373 |
| 10 | $296,716 | $19,536 | $7,011 | $212,185 |
| 15 | $253,957 | $16,852 | $9,695 | $302,160 |
| 20 | $194,828 | $13,141 | $13,406 | $375,766 |
| 25 | $113,065 | $8,008 | $18,538 | $426,736 |
| 30 | $0 | $912 | $25,635 | $446,406 |
Principal only overtakes interest around year 20. That is why selling or refinancing after a few years leaves you with less equity than you might expect.
What the schedule helps you decide
- 15 or 30 years? Switch the term to 15 years: the payment rises, but total interest falls by more than half.
- Extra payments: every extra dollar goes straight to principal and saves all the future interest on it. Early in the loan, that effect is strongest; the mortgage payoff calculator measures it.
- Refinancing: compare the balance shown for the current year with a new loan’s closing costs and rate.
- Taxes: if you itemize deductions, the yearly interest figure approximates what appears on Form 1098, subject to the mortgage interest deduction limits.
Adjustable-rate loans
For an ARM, the schedule only holds until the first rate reset. Rerun the calculator with the remaining balance, remaining term and new rate each time it adjusts.