What is amortization?
Amortization spreads loan repayment over a schedule. Each payment covers interest and pays down principal. In this fixed-rate example, the principal-and-interest payment stays generally level while its composition changes.
EDUCATIONAL HOME LOAN TOOLS
Understand loan amortization
See how the loan balance changes and how each monthly payment is divided between principal and interest. Change the sample assumptions to explore the math.
Read the charts with context.
The balance chart shows debt remaining, not home value or equity. The annual bars show principal and interest only. Taxes, insurance, and other ownership costs are shown separately and do not pay down the loan.
Sample assumptions only. The example rate is not a current or advertised rate.
Your entries are calculated in this browser and are not submitted as a lead or saved by this calculator.
MONTHLY PRINCIPAL & INTEREST
$2,022.62Loan payment only. Taxes, insurance, and other costs are excluded.
- Loan amount
- $320,000.00
- Principal & interest / month
- $2,022.62
- Interest over loan term
- $408,140.64
- Total principal & interest
- $728,140.64
Fixed-rate principal and interest. See calculation assumptions ↓
Educational loan illustration only. See assumptions & disclosures ↓
SEE WHERE THE PAYMENTS GO
One payment.
Two different purposes.
Interest is the borrowing charge for that month. Principal pays down the amount borrowed. With a fixed rate and regular payments, a declining balance usually means less interest and more principal in later payments.
Remaining loan balance
Principal vs. interest each year
🟩 Principal🟦 Interest
| Year | Principal | Interest | Ending balance |
|---|---|---|---|
| 1 | $3,576.76 | $20,694.68 | $316,423.24 |
| 2 | $3,816.28 | $20,455.16 | $312,606.96 |
| 3 | $4,071.88 | $20,199.56 | $308,535.08 |
| 4 | $4,344.57 | $19,926.87 | $304,190.51 |
| 5 | $4,635.54 | $19,635.90 | $299,554.97 |
| 6 | $4,946.00 | $19,325.44 | $294,608.97 |
| 7 | $5,277.22 | $18,994.22 | $289,331.75 |
| 8 | $5,630.65 | $18,640.79 | $283,701.10 |
| 9 | $6,007.75 | $18,263.69 | $277,693.35 |
| 10 | $6,410.11 | $17,861.33 | $271,283.24 |
| 11 | $6,839.41 | $17,432.03 | $264,443.83 |
| 12 | $7,297.46 | $16,973.98 | $257,146.37 |
| 13 | $7,786.17 | $16,485.27 | $249,360.20 |
| 14 | $8,307.62 | $15,963.82 | $241,052.58 |
| 15 | $8,864.02 | $15,407.42 | $232,188.56 |
| 16 | $9,457.63 | $14,813.81 | $222,730.93 |
| 17 | $10,091.05 | $14,180.39 | $212,639.88 |
| 18 | $10,766.86 | $13,504.58 | $201,873.02 |
| 19 | $11,487.93 | $12,783.51 | $190,385.09 |
| 20 | $12,257.30 | $12,014.14 | $178,127.79 |
| 21 | $13,078.20 | $11,193.24 | $165,049.59 |
| 22 | $13,954.06 | $10,317.38 | $151,095.53 |
| 23 | $14,888.61 | $9,382.83 | $136,206.92 |
| 24 | $15,885.71 | $8,385.73 | $120,321.21 |
| 25 | $16,949.60 | $7,321.84 | $103,371.61 |
| 26 | $18,084.76 | $6,186.68 | $85,286.85 |
| 27 | $19,295.92 | $4,975.52 | $65,990.93 |
| 28 | $20,588.22 | $3,683.22 | $45,402.71 |
| 29 | $21,967.04 | $2,304.40 | $23,435.67 |
| 30 | $23,435.67 | $833.21 | $0.00 |
Explore the monthly payment schedule
| Payment # | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | $2,022.62 | $289.29 | $1,733.33 | $319,710.71 |
| 2 | $2,022.62 | $290.85 | $1,731.77 | $319,419.86 |
| 3 | $2,022.62 | $292.43 | $1,730.19 | $319,127.43 |
| 4 | $2,022.62 | $294.01 | $1,728.61 | $318,833.42 |
| 5 | $2,022.62 | $295.61 | $1,727.01 | $318,537.81 |
| 6 | $2,022.62 | $297.21 | $1,725.41 | $318,240.60 |
| 7 | $2,022.62 | $298.82 | $1,723.80 | $317,941.78 |
| 8 | $2,022.62 | $300.44 | $1,722.18 | $317,641.34 |
| 9 | $2,022.62 | $302.06 | $1,720.56 | $317,339.28 |
| 10 | $2,022.62 | $303.70 | $1,718.92 | $317,035.58 |
| 11 | $2,022.62 | $305.34 | $1,717.28 | $316,730.24 |
| 12 | $2,022.62 | $307.00 | $1,715.62 | $316,423.24 |