Amortization Schedule

When you take out a 30-year mortgage, a surprising amount of your early payments goes straight to the lender as interest rather than reducing your actual debt. On a $300,000 mortgage at 6.5%, less than 20% of your first payment touches the principal. An amortization schedule reveals this exact breakdown for every single payment over the life of your loan.

What is an amortization schedule?

An amortization schedule is a complete table detailing each periodic payment on an installment loan. It shows how every payment is split between interest costs and principal reduction until the balance reaches zero at the end of the term. Lenders use this table to determine your monthly obligation, but borrowers use it to understand the true cost of borrowing and to plan early payoff strategies.

The calculator above generates your full amortization schedule instantly. Enter your loan amount, term, and interest rate to see how each payment impacts your total balance.

How to read an amortization table

A standard amortization table includes five key columns:

• Payment number: The sequential number of the payment (1 to 360 for a 30-year loan).
• Total payment: Your fixed monthly installment.
• Principal portion: The part of the payment that reduces your outstanding loan balance.
• Interest portion: The fee paid to the lender, calculated on the remaining balance.
• Remaining balance: The outstanding debt after the payment is applied.

Early in the schedule, the interest portion dominates. As the remaining balance shrinks, the interest charge decreases, allowing more of your fixed payment to chip away at the principal.

How to calculate loan amortization

To build a schedule manually, you need the total loan amount (P), the annual interest rate, and the loan term in months (n). First, calculate the fixed monthly payment using the amortization formula:

M = P × [r(1 + r)^n] / [(1 + r)^n - 1]

Where:

• M = Monthly payment
• P = Initial principal ($300,000)
• r = Monthly interest rate (annual rate / 12, e.g., 6.5% annual = 0.00542 monthly)
• n = Total number of payments (360 for 30 years)

For a $300,000 loan at 6.5% over 30 years, the monthly payment is $1,896. In month one, the interest is $1,625 (0.00542 × $300,000), leaving only $271 for principal. By month 360, the interest drops to under $10, with over $1,886 going to principal.

The impact of extra payments

Because interest is calculated on the remaining balance, making extra payments directly toward the principal dramatically accelerates your payoff date. Adding just $100 a month to your regular payment on a $300,000 mortgage can shave years off your term and save tens of thousands in interest.

When you make an extra payment, the lender recalculates the interest based on the new, lower balance. The required monthly payment stays the same, but the proportion shifts heavily in your favor. You can test these scenarios using the calculator above.

Straight-line vs. declining balance amortization

Most consumer loans, like mortgages and auto loans, use the declining balance method. In this structure, payments remain equal, but the internal ratio of interest to principal shifts over time.

Straight-line amortization is less common for personal borrowing. It applies an equal amount of principal to every payment, meaning your total payment starts high (because the interest is high) and gradually decreases over the term. You will typically see this in business loans or specific commercial financing arrangements.

This calculator provides estimates for informational purposes; consult your lender or financial advisor for official repayment figures.