Amortization Schedule Calculator
Amortization Formula
Monthly Payment: M = P[r(1+r)^n] / [(1+r)^n - 1]
Where:
• P = Principal loan amount
• r = Monthly interest rate (Annual rate / 12)
• n = Total number of payments (Years × 12)
Each Payment: Interest = Balance × r, Principal = Payment - Interest
Break down each payment into principal and interest over time to understand debt payoff progression and total borrowing cost.
Formula
Worked Example
Interest each month is the balance times 5.8% ÷ 12, so the first payment is mostly interest ($1,450). As the balance falls, more of the same $1,760.26 goes to principal; over 30 years the loan costs $333,693 in interest, more than the amount borrowed.
Frequently Asked Questions
Why do early payments mostly cover interest?
Interest is calculated on the larger beginning balance, so it dominates initial installments.
How do extra payments affect schedule?
Additional principal payments reduce balance faster, shorten term, and lower total interest paid.