Amortization Schedule Calculator
Quickly compute amortization schedule with accurate formulas. See amortization schedules, growth projections, and side-by-side comparisons.
Reviewed by Sahil, Senior Finance & Tax Editor
Formula
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where M = Monthly payment, P = Principal (loan amount), r = Monthly interest rate (annual rate / 12), n = Total number of payments (years × 12). Each monthly payment consists of an interest portion (remaining balance × monthly rate) and a principal portion (payment minus interest). As the balance decreases, the interest portion shrinks and the principal portion grows.
Worked Examples
Example 1: Standard 30-Year Mortgage
Problem:You take out a $250,000 mortgage at 6.5% interest for 30 years. What are the monthly payments and total interest?
Solution:Monthly rate: 6.5% / 12 = 0.5417%\nTotal payments: 30 x 12 = 360\nMonthly payment: $250,000 x [0.005417 x (1.005417)^360] / [(1.005417)^360 - 1] = $1,580.17\nTotal paid: $1,580.17 x 360 = $568,861\nTotal interest: $568,861 - $250,000 = $318,861\nFirst payment: $1,354 interest + $226 principal\nLast payment: $9 interest + $1,572 principal
Result:Monthly: $1,580.17 | Total Interest: $318,861 | Total Paid: $568,861
Example 2: 15-Year Mortgage Comparison
Problem:Same $250,000 loan but at 5.75% for 15 years. Compare with the 30-year option.
Solution:Monthly rate: 5.75% / 12 = 0.4792%\nTotal payments: 15 x 12 = 180\nMonthly payment: $250,000 x [0.004792 x (1.004792)^180] / [(1.004792)^180 - 1] = $2,072.78\nTotal paid: $2,072.78 x 180 = $373,100\nTotal interest: $373,100 - $250,000 = $123,100\nSavings vs 30-year: $318,861 - $123,100 = $195,761 in interest saved
Result:Monthly: $2,072.78 | Total Interest: $123,100 | Saves $195,761 vs 30-year
Frequently Asked Questions
How do extra payments affect my amortization schedule?
Making extra payments toward your mortgage principal can dramatically reduce both the total interest paid and the loan term. Extra payments reduce the outstanding principal faster, which means less interest accrues in subsequent months, creating a compounding savings effect. For example, on a $250,000 30-year mortgage at 6.5%, adding just $200 per month to your payment reduces the loan term by about 8 years and saves approximately $94,000 in interest. Even one extra payment per year (making 13 payments instead of 12) can shave 4-5 years off a 30-year mortgage. The most cost-effective time to make extra payments is early in the loan when interest costs are highest. Always confirm with your lender that extra payments are applied to principal and that there are no prepayment penalties.
References
Reviewed by Sahil, Senior Finance & Tax Editor · Editorial policy