Amortization Calculator
By Talcart · Last updated July 10, 2026
Amortization Calculator Guide
Understanding Loan Amortization
Monthly Payment Formula
PMT = P × (r × (1 + r)^n) / ((1 + r)^n - 1)
Where: P = Principal, r = Monthly rate, n = Total payments
Example: $200,000 loan, 30 years, 4% APR
Payment Breakdown
Early payments: Mostly interest
Later payments: Mostly principal
Total payment remains constant
Amortization Calculator
An amortization calculator splits every loan payment into principal and interest. On a $200,000, 30-year loan at 6%, the first payment of $1,199.10 contains $1,000.00 of interest and only $199.10 of principal. Enter an amount, rate, and term to see the complete month-by-month schedule, watch the balance decline, and test how extra payments shorten the loan.
Key facts
- On a $200,000, 30-year loan at 6%, total interest is $231,676 - more than the amount borrowed. The 15-year version costs $103,788, a saving of $127,888.
- Month 1 of that 30-year loan splits the $1,199.10 payment into $1,000.00 interest and $199.10 principal; the balance does not fall to half until around month 252 of 360.
- The fixed payment solves M = P x r x (1 + r)^n / ((1 + r)^n - 1); each month's interest is always the previous balance multiplied by the periodic rate.
What is the Amortization Calculator?
Amortization is the repayment of a loan through equal periodic payments, each divided between interest on the outstanding balance and reduction of principal. Because interest is charged on whatever balance remains, early payments are mostly interest and late payments are mostly principal, even though the payment amount never changes. An amortization schedule is the table that documents this split for every period, along with the remaining balance, from the first payment to the last. Mortgages, auto loans, and personal loans all follow this structure.
How does the Amortization Calculator work?
The calculator first solves the fixed payment with M = P x r x (1 + r)^n / ((1 + r)^n - 1), where P is principal, r the monthly rate (annual rate / 12), and n the number of payments. It then iterates month by month: interest equals the prior balance times r, principal equals the payment minus that interest, and the new balance is the old balance minus principal. For $200,000 at 6% over 360 months, r = 0.005 and M = $1,199.10.
What is the Amortization Calculator formula?
- B_t – balance after period t
- PMT – fixed payment
- r – periodic rate
Monthly payment and total interest on a $200,000 loan
| Rate | Term | Monthly payment | Total interest |
|---|---|---|---|
| 5% | 15 years | $1,581.59 | $84,686 |
| 5% | 30 years | $1,073.64 | $186,512 |
| 6% | 15 years | $1,687.71 | $103,788 |
| 6% | 30 years | $1,199.10 | $231,676 |
| 7% | 15 years | $1,797.66 | $123,579 |
| 7% | 30 years | $1,330.60 | $279,018 |
How do you use the Amortization Calculator?
- Enter loan amount, rate, and term.
- Read the full table.
- Optional: model an extra payment.
Worked example
| Scenario | $100,000 at 5%, 30 years |
| Calculation | Month 1 interest = 100,000 × 0.004167 = $416.67 |
| Result | Month 1 payment $536.82 → $416.67 interest, $120.15 principal. |
Common use cases
Tips & best practices
Bi-weekly payments quietly add one extra payment per year — large interest savings.
Frequently asked questions
Because interest is charged on the outstanding balance, which is largest at the start. On a $200,000 loan at 6%, month one charges 200,000 x 0.005 = $1,000 of interest out of a $1,199.10 payment. As principal falls, the interest portion shrinks; on this loan the split does not reach 50/50 until roughly month 222 of 360.
A 15-year loan costs far less in total but demands a higher payment. At 6% on $200,000, the 15-year option runs $1,687.71 a month with $103,788 total interest, versus $1,199.10 and $231,676 over 30 years. If you can absorb the extra $489 a month, the shorter term saves $127,888.
Usually yes, if the loan rate exceeds what your money could reliably earn elsewhere after tax. Prepaying a 6% loan is a guaranteed 6% return. Exceptions: loans with prepayment penalties, very cheap fixed-rate debt, or when you lack an emergency fund. Every extra dollar goes straight to principal, so it removes all future interest on that dollar.
Roughly five and a half years and tens of thousands of dollars on a typical 30-year loan. Paying half the monthly amount every two weeks produces 26 half-payments, i.e. 13 full payments a year. On $200,000 at 6%, that retires the loan in about 24.5 years and cuts total interest by roughly $49,000.
Negative amortization is when a payment is smaller than the interest accrued, so the shortfall is added to the balance and the debt grows. It appears in some adjustable-rate mortgages with payment caps, deferred student loans, and income-driven repayment plans. A standard amortizing payment always covers the full interest charge plus some principal.
No. Interest-only loans defer principal for an initial period, balloon loans leave a lump sum due at maturity, and credit cards are revolving debt with no fixed schedule at all. Fully amortizing loans - most mortgages, auto loans, and personal loans - are designed so the balance reaches exactly zero on the final scheduled payment.
Compute the payment with M = P x r x (1 + r)^n / ((1 + r)^n - 1), then loop: interest = balance x r, principal = M - interest, new balance = balance - principal. For $100,000 at 5% over 30 years, M = $536.82; month one is $416.67 interest and $120.15 principal, leaving $99,879.85.