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Amortization is the process of paying off a loan with fixed, regular payments. Each payment covers both interest and principal. Early payments are mostly interest, while later payments are mostly principal.

No, this calculator shows principal and interest only. For a full monthly housing payment estimate, add property taxes, homeowners insurance, and possibly PMI to the calculated monthly payment.

Making extra payments toward the principal reduces both the total interest paid and the loan term. Our amortization schedule shows how early payments are mostly interest — extra principal payments early in the loan save the most. Try reducing the loan term to see how payments change.

Our calculator assumes a fixed interest rate for the full loan term — your payment stays the same every month. For variable-rate loans (common with ARMs and HELOCs), you'll need to recalculate whenever the rate changes to see your new payment amount.

With amortized loans, interest is calculated on the remaining balance. Early in the loan, when the balance is highest, interest makes up most of each monthly payment. As you pay down principal, the interest portion shrinks and more goes toward reducing the balance — this is called building equity.