Amortization schedule calculator

What is an amortization schedule?

An amortization schedule is a table that lays out every payment on a loan from the first month to the last, showing how each payment is divided between interest and principal and how the remaining balance shrinks over time. On an amortizing loan the payment stays the same every month, but the mix inside that payment changes: at the start most of the money goes toward interest, and only a small slice pays down the balance you actually owe. As the balance falls, the interest portion falls with it, so more of each later payment chips away at the principal.

This calculator gives you the two things most people want before committing to a loan: the level monthly payment, and a clear picture of how lopsided that first payment really is. Enter the loan amount, the annual interest rate, and the term in years, and it returns the monthly payment, the interest and principal portions of the very first payment, and the totals you will pay across the whole loan.

How does it work?

You provide three pieces of information:

• The loan amount — the principal you borrow.
• The annual interest rate, as a percentage.
• The loan term, in years.

The calculator turns the annual rate into a monthly rate by dividing by 12, and turns the term in years into a number of monthly payments by multiplying by 12. It then applies the standard amortization formula to find a single level payment that pays the loan off exactly at the end of the term.

Once the monthly payment is known, the split of the first payment follows directly. Interest for the first month is charged on the full opening balance, so it equals the loan amount times the monthly rate. Whatever is left of the payment after covering that interest reduces the principal. Because the balance is at its highest in month one, the interest portion is at its largest here and the principal portion at its smallest — which is why early payments feel like they barely move the balance.

Formula

Let $P$ be the loan amount, $r$ the monthly interest rate, and $n$ the number of monthly payments.

$r = \frac{\text{annual rate}}{100 \times 12} \qquad n = \text{years} \times 12$

The level monthly payment $M$ is:

$M = \frac{P \cdot r \cdot (1 + r)^{n}}{(1 + r)^{n} - 1}$

When the interest rate is zero this simplifies to $M = P / n$.

For the first payment, the interest and principal portions are:

$\text{interest}_1 = P \cdot r \qquad \text{principal}_1 = M - P \cdot r$

The total of all payments is $M \cdot n$, and the total interest paid over the life of the loan is $M \cdot n - P$.

Worked example

Take a $200,000 loan at a 6% annual rate over 30 years.

• Monthly rate: $r = 0.06 / 12 = 0.005$
• Number of payments: $n = 30 \times 12 = 360$

The level payment works out to:

$M = \frac{200000 \cdot 0.005 \cdot (1.005)^{360}}{(1.005)^{360} - 1} \approx 1199.10$

The first month’s interest is $200000 \times 0.005 = 1000.00$, so only $1199.10 - 1000.00 = 199.10$ of that first payment actually reduces the balance. Over the full term you pay about $431,676 in total, of which roughly $231,676 is interest — more than the amount you originally borrowed.

Notes

This tool shows the level payment, the interest and principal split of the first payment, and the loan totals. It does not print the full month-by-month table, but the pattern it reveals holds for every row: the interest share starts high and falls as the balance drops, while the principal share starts low and grows, until the final payment is almost entirely principal. The chart plots this over the life of the loan — the remaining balance curving down to zero and the cumulative interest paid rising toward its total.

The results assume a fixed rate and equal monthly payments, which is the usual structure for mortgages and most installment loans. They do not include property taxes, insurance, origination fees, or extra payments. Making additional payments toward principal, or choosing a shorter term, reduces the total interest because it shrinks the balance that interest is charged on.

FAQs

Why is so much of my early payment interest?

Interest each month is charged on the outstanding balance, and the balance is at its highest right at the start. With a $200,000 loan at 6%, the first month’s interest alone is $1,000, so only about $199 of the first payment reduces principal. As the balance falls, the interest portion shrinks and the principal portion grows.

Does a shorter term save interest?

Yes. A shorter term raises the monthly payment but pays the principal down faster, so interest is charged on a smaller balance for fewer months. The total interest over the life of the loan drops substantially compared with a longer term at the same rate.

What happens when the interest rate is zero?

With no interest, every payment is pure principal. The monthly payment is simply the loan amount divided by the number of months, the first payment has no interest portion, and the total interest is zero.