An amortization calculator works out the fixed monthly payment on a loan and shows how each payment is split between interest and principal until the balance reaches zero. A $250,000 loan at 6.5% over 30 years costs $1,580.17 a month and $318,861 in total interest.
On this page
How to use the amortization calculator
- Enter the loan amount.
- Enter the annual interest rate.
- Enter the term in months, such as 360 for 30 years.
- Read the monthly payment, total paid and total interest.
What is the amortization formula?
- Monthly rate r = annual rate ÷ 12
- Payment = P × r ÷ (1 − (1 + r)−n), where P is the loan amount and n the number of months
- Each month: interest = balance × r; principal = payment − interest; new balance = balance − principal
Amortization calculator worked example
A $250,000 loan at 6.5% for 30 years (360 months) has a payment of $1,580.17. The first six months:
| Month | Payment | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $1,580.17 | $1,354.17 | $226.00 | $249,774 |
| 2 | $1,580.17 | $1,352.94 | $227.23 | $249,547 |
| 3 | $1,580.17 | $1,351.71 | $228.46 | $249,318 |
| 4 | $1,580.17 | $1,350.47 | $229.70 | $249,089 |
| 5 | $1,580.17 | $1,349.23 | $230.94 | $248,858 |
| 6 | $1,580.17 | $1,347.98 | $232.19 | $248,625 |
Amortization schedule by year
| Year | Interest that year | Principal that year | Balance at year end |
|---|---|---|---|
| 1 | $16,168 | $2,794 | $247,206 |
| 5 | $15,341 | $3,621 | $234,027 |
| 10 | $13,954 | $5,008 | $211,940 |
| 15 | $12,037 | $6,925 | $181,398 |
| 20 | $9,386 | $9,576 | $139,163 |
| 25 | $5,720 | $13,242 | $80,760 |
| 30 | $651 | $18,311 | $0 |
In the first month, $1,354.17 of the payment is interest and only $226.00 reduces the balance. Over the full term you pay $318,861 in interest. The split shifts every month: by year 20 more than half of each payment goes to principal, and in the last year almost all of it does.
How the term changes the cost
| Term | Monthly payment | Total interest |
|---|---|---|
| 10 years | $2,838.70 | $90,644 |
| 15 years | $2,177.77 | $141,998 |
| 20 years | $1,863.93 | $197,344 |
| 30 years | $1,580.17 | $318,861 |
A shorter term raises the monthly payment but cuts total interest sharply, because the balance falls faster and interest is charged on a smaller amount for less time. The amortization calculator lets you test a few terms to find a payment you can afford.
Extra payments
Any extra amount paid toward principal reduces the balance immediately, so every later payment has less interest in it and more principal. Even a small extra payment each month can take years off a long loan. Before paying extra, check the loan terms for prepayment penalties, and tell the lender to apply the extra to principal rather than to next month’s payment. The CFPB explains that most mortgages and auto loans amortize in this way, though some loans, such as interest-only or balloon loans, do not.
Estimates for education only, not financial advice. Your lender’s figures are final.
How to read an amortization schedule
An amortization schedule lists every payment in order. Each row shows the payment, the part that covers interest for that month, the part that reduces the principal and the balance left afterwards. The payment stays the same, but the split changes: interest is charged on the balance, so as the balance falls, less of each payment is needed for interest and more goes to principal. That is why, in the example, it takes until about month 233 for the principal part of each payment to overtake the interest part.
The schedule also shows how much equity you have built at any point. After five years on the example loan, about $16,000 of the original $250,000 has been repaid. If you sell or refinance early in a loan, you will owe much more than a straight-line estimate would suggest, so check the balance in the amortization calculator before making plans.
Rates, refinancing and the schedule
The amortization calculator assumes a fixed rate for the whole term. With an adjustable-rate loan, the payment and the schedule are recalculated when the rate resets, based on the balance at that time and the months remaining. When you refinance, a new schedule starts from the beginning, so a new 30-year loan restarts the slow early years of mostly interest even if the rate is lower. Compare the total interest left on your current loan with the total interest on the new one, plus closing costs, rather than looking at the monthly payment alone.
The calculation works the same way for car loans, personal loans and student loans with fixed payments. Enter the term in months, such as 60 for a five-year car loan, and the amortization calculator gives the payment and total interest.
Related converters and calculators
Related calculators:
- Mortgage amortization calculator: mortgages
- Loan calculator: loans
- Mortgage payoff calculator: extra payments
- Auto loan calculator: car loans
Sources
CFPB: What is amortization?; CFPB: How do mortgage lenders calculate monthly payments?.
Questions about this calculator
What is amortization?
Paying off a loan with fixed payments that cover interest and principal until the balance is zero.
What is the payment on $250,000 at 6.5% for 30 years?
$1,580.17 a month.
Why is most of the early payment interest?
Interest is charged on the balance, which is largest at the start.
Do extra payments help?
Yes. Extra principal lowers the balance and the interest on every later payment.
Does this include taxes and insurance?
No. It covers principal and interest only.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
Report a calculation issue