Amortization Calculator — payment, total interest & schedule

How it works

An amortizing loan is repaid in equal monthly payments over a fixed term. Each payment first covers the interest that accrued on the outstanding balance — the balance times the monthly rate — and whatever is left reduces the principal. The payment amount comes from the standard amortization formula, M = P·r(1+r)ⁿ ⁄ ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly rate (the annual rate divided by 12), and n is the number of payments (the term in years times 12). Because the balance is highest at the start, early payments are mostly interest and only slowly chip away at principal; as the balance shrinks, the interest portion falls and the principal portion grows, so the loan pays off exactly at the end of the term. Paying extra each month goes straight to principal, which shortens the term and cuts total interest.

Worked example

Take a $340,000 loan at 3.5% over 30 years. The monthly rate is 3.5% ÷ 12 ≈ 0.292% over n = 360 payments, so the amortization formula gives a monthly payment of about $1,526.76 (LibreTexts). Over the full term that is 360 payments totalling $549,633.60, of which $209,633.60 is interest on the $340,000 borrowed — both totals LibreTexts publishes. Early on, most of each payment is interest, because interest is charged on the still-large balance; by the final year almost all of each payment is principal.

Frequently asked questions

What is loan amortization?

Amortization is the process of paying off a loan with equal, regular payments that each cover the interest due plus a portion of the principal. Over the term, the balance falls to zero, and the split between interest and principal shifts from mostly interest at the start to mostly principal at the end.

How is the monthly payment calculated?

From the loan amount (P), the monthly rate (r, the annual rate divided by 12), and the number of payments (n): M = P·r(1+r)ⁿ / ((1+r)ⁿ − 1); at a 0% rate it is simply the loan divided by the number of months. The payment stays fixed for the whole term — what changes is how each one divides between interest on the current balance and principal, the split an amortization schedule lays out.

What is an amortization schedule?

A table showing, for each period, how that payment divides between interest and principal and what balance remains afterward. It makes the shift over the life of the loan concrete — the same figures the calculator sums into your total interest.

Why does more of my payment go to interest at first?

Interest is charged on the outstanding balance, which is largest at the beginning — so in the first year most of each payment covers interest and little reduces principal. As the balance falls the interest charge falls with it, and the principal share grows every year until the final payments are almost entirely principal. That year-by-year shift is what an amortization schedule makes visible.

How do extra payments change things?

Any amount above the required payment goes entirely to principal, so the balance reaches zero before the scheduled final period; the schedule ends early and the interest that would have accrued in the removed months is never charged, so the total drops. For a side-by-side of the interest and time an extra payment saves — baseline against accelerated — the mortgage-payoff calculator is built for that.

How is this different from a mortgage calculator?

The core math is identical — a mortgage is an amortizing loan. This calculator takes the loan amount directly and reports the payment, interest, and schedule for any loan; a mortgage calculator adds home-specific pieces like down payment, property tax, insurance, and PMI.

How accurate is this, and what does it exclude?

The payment, interest, and schedule are exact for a fixed-rate loan held to term. It excludes fees rolled into some loans (origination, closing costs), variable rates, and any late or missed payments — confirm the figures against your loan agreement.