Loan Amortization Calculator

What Is Loan Amortization?

Use this loan amortization calculator to see your full payment schedule and how much interest you pay over the life of any fixed-rate loan. Loan amortization is the process of paying off a fixed-rate loan through scheduled, equal monthly payments over a defined term. Each payment covers two things: the interest owed for the period (calculated as your remaining balance × monthly interest rate) and a portion of the principal. As the balance decreases over time, the interest portion of each payment shrinks and the principal portion grows — this is the defining feature of an amortizing loan.

The most important insight from an amortization schedule: in the early years of a loan, the vast majority of your payment goes to interest, not principal. On a 30-year $300,000 mortgage at 7%, your first payment of approximately $1,996 includes about $1,750 in interest and only $246 in principal. By year 15, the split is closer to 50/50. By year 29, almost all of each payment is principal. This front-loaded interest structure is why extra early payments are so powerful — every dollar of principal paid early eliminates future interest that compounds on a now-smaller balance.

How to Use This Loan Amortization Calculator

Enter the loan amount, term (years and months), and annual interest rate to see your monthly payment and full loan amortization schedule. Optionally, add an extra monthly payment to see how much interest you save and how many months earlier you pay off the loan. Toggle between Annual and Monthly views in the schedule table.

For mortgage-specific calculations including property tax, insurance, and PMI, use our mortgage calculator.

How Loan Amortization Works

A fixed-rate amortizing loan has the same payment every month, but the split between interest and principal changes each period. In month 1 of a 30-year $300,000 mortgage at 7%, you pay about $1,750 in interest and only $246 in principal. In month 360, you pay about $12 in interest and $1,984 in principal. This is amortization — as the balance falls, interest charges fall and more of each payment goes to principal.

The standard amortization formula:

M = P × [r(1+r)^n] / [(1+r)^n – 1]

Where M = monthly payment, P = principal, r = monthly rate (annual rate ÷ 12), n = number of payments. Each month: Interest = Balance × r; Principal = M – Interest; New Balance = Balance – Principal.

The Power of Extra Payments

Extra principal payments have an outsized impact on total interest because they reduce the balance that future interest accrues on. Every dollar of extra principal applied in month 1 saves approximately [(1+r)^(n–1) – 1] dollars in interest over the remaining term — often $2–3 for each $1 extra paid early in a 30-year loan at 7%.

Common extra payment strategies:

• Fixed extra monthly amount — the simplest approach; add $100–$500/month consistently
• Bi-weekly payments — pay half the monthly amount every two weeks; this results in 26 half-payments (13 full payments) per year instead of 12, effectively making one extra payment annually
• Annual lump sum — apply a tax refund, bonus, or windfall directly to principal once per year
• Round up — round your payment up to the nearest $50 or $100; minimal impact on monthly cash flow but meaningful over time

If you have multiple debts, see our debt snowball calculator to sequence payoffs for maximum momentum.

15-Year vs. 30-Year Mortgage: Which Is Better?

The choice between a 15-year and 30-year mortgage depends on your income stability and financial goals. Consider the tradeoffs on a $350,000 loan:

• 30-year at 7.0%: $2,329/mo — $488,000 total paid — $138,000 in interest
• 15-year at 6.5%: $3,051/mo — $549,180 total paid... wait, that can't be right — actually $549,180 total at 6.5% for 15 years comes to about $72,000 interest, so total ≈ $422,000

The 30-year option frees up $722/month — which you can invest, build an emergency fund with, or use for other goals. But the 15-year saves roughly $66,000 in interest and builds equity twice as fast. If your income is stable and you want to minimize total cost, the 15-year wins. If you value flexibility or expect to move within 10 years, the 30-year makes sense — especially if you make extra payments when cash flow allows.

Common Loan Types and Typical Terms

• 30-year conventional mortgage — most common home loan; lower monthly payment but higher total interest
• 15-year mortgage — faster equity buildup; typically 0.5–0.75% lower interest rate than a 30-year
• Auto loan (48–72 months) — 4–6 year terms are standard; longer terms lower payments but increase total cost
• Personal loan (24–60 months) — typically higher rates (8–25%); used for debt consolidation or major purchases
• Student loan (10–25 years) — federal loans have income-driven options; private loans amortize like any fixed-rate loan

Financial Disclaimer

This calculator is for educational and planning purposes only. Results assume a fixed interest rate and do not include taxes, insurance, PMI, or other fees. Actual loan terms, rates, and payoff timelines depend on your lender and credit profile. Consult a licensed financial professional before making borrowing decisions.