Amortization Schedule: How Each Mortgage Payment Splits Between Interest and Principal

Mortgage amortization explained in three steps:

1. Find the monthly rate. Divide the annual rate by 12. A 7.40 percent loan charges 0.6167 percent a month.
2. Set a fixed payment. The lender picks the one payment that, applied every month for the full term, pays off the loan exactly. The standard formula to calculate monthly repayments on a mortgage is payment = P × r ÷ (1 minus (1 + r) to the power of minus n), where P is the loan amount, r the monthly rate and n the number of payments. In a spreadsheet, =PMT(0.074/12, 360, -360000) returns $2,492.57.
3. Split each payment. Interest for the month is the current balance times the monthly rate. Principal is the payment minus that interest. Subtract the principal from the balance and repeat.

Our example loan: a $400,000 townhouse in Raleigh's Five Points, bought with 10 percent down, leaving a $360,000 30-year fixed loan at 7.40 percent. The rate matches the 30-year average in Freddie Mac's Primary Mortgage Market Survey for the week of October 15, 2026; the price and loan are illustrative. For the first payment, interest is $360,000 × 0.074 ÷ 12 = $2,220.00. Principal is $2,492.57 minus $2,220.00, or $272.57, and the balance becomes $359,727.43.

How much of that monthly payment you can carry in the first place is the subject of our guide to how much house you can afford, which starts from the same payment and adds taxes, insurance and dues.

Here is an excerpt of the full 360-row amortization schedule for the example loan, calculated at full precision and shown rounded to the cent:

Assumptions: fixed rate, no extra payments, interest calculated monthly on the outstanding balance, every payment on time. Servicers round each row to the cent, so a real schedule can differ from this one by a few cents along the way and show a final payment a few dollars smaller than the others.

• Payment number or date. Counts from the first payment after closing. Some schedules show calendar dates instead of numbers.
• Payment. Principal and interest only. If your monthly bill is higher, the difference is escrow or mortgage insurance, not a mistake in the schedule.
• Interest. The cost of borrowing for that month, always the previous balance times the monthly rate.
• Principal. The part that reduces what you owe, and the part that builds equity, apart from any change in the home's value.
• Remaining balance. The principal still owed after that payment. A payoff quote from the servicer is the figure to use if you sell or refinance.
• Cumulative columns. Some schedules add running totals of interest and principal, which make the year-by-year picture easier to see.

Two quick checks: interest plus principal should equal the payment on every row, and each balance should equal the previous balance minus that row's principal, give or take a cent of rounding. If a row breaks either rule, something other than the scheduled payment, such as extra principal, was applied that month.

Read down the amortization schedule and the interest share falls slowly. On the first payment, 89 percent goes to interest. By payment 120 it is still 77 percent. Principal does not overtake interest until payment 249, in the 21st year, and the balance does not fall below half the original loan until payment 265.

Over the first ten years, the borrower pays $250,878 in interest and $48,230 in principal. Over all 30 years, interest totals $537,324 on a $360,000 loan. A lower rate changes every row of that table, which is why discount points can be worth paying when you plan to keep the loan long; our guide to points on a mortgage works through the break-even.

The opposite of this pattern is negative amortization, where a payment does not cover the month's interest and the balance grows even though you paid, as the CFPB explains. A fully amortizing fixed-rate loan cannot do that.

Any money applied to principal moves you ahead on the amortization schedule. The interest you would have paid on that principal for the rest of the loan disappears, and the loan ends sooner. On the example loan:

Say you own a condo in Salt Lake City's Sugar House and receive an annual bonus. A lump sum shortens the loan but leaves the monthly payment unchanged. Some servicers offer a mortgage recast, which writes a new amortization schedule for the lower balance over the remaining term; on the example, a $10,000 prepayment after year one followed by a recast would drop the payment to about $2,422.67. Ask your servicer whether it recasts and what it charges.

Biweekly payments: same math, watch the fees

A biweekly amortization schedule takes half a payment every two weeks. With 26 half payments a year, you pay the equivalent of 13 monthly payments instead of 12. That extra payment per year is what saves money: modeled as one-twelfth of a payment added each month, the example loan ends in 23 years and 5 months. If the servicer credits each half payment as it arrives, the result is close, about 23.4 years and roughly $140,100 of interest saved.

Third-party biweekly programs can charge for this. In 2015 the CFPB sued Nationwide Biweekly Administration, alleging that the company charged a setup fee of up to $995 plus $84 to $101 a year in processing fees, and that a consumer matching what the company called its median 2013 enrollee, with a roughly $160,000 loan at 4.125 percent, would need nine years in the program to recoup them. You can usually get the same effect for free by adding one-twelfth of your payment to each monthly payment and marking it for principal.

Before prepaying, read the note for a prepayment penalty. The CFPB says such penalties typically apply when you pay off the whole balance within a set number of years, usually three or five, and that small extra principal payments usually do not trigger one.

The rates below are illustrative. The 15-year rate is the PMMS 15-year average of 6.71 percent for the same week; the survey publishes no 40-year average, so the 40-year row assumes the 30-year rate.

The term changes the amortization schedule more than any other choice. The 15-year loan costs $685 more a month and saves about $325,000 in interest. The 40-year loan saves $150 a month and adds about $227,000. After ten years, the 40-year borrower has paid down only about $21,700 of principal. Our analysis of the 40-year mortgage explains why those loans fall outside the Qualified Mortgage rules and are harder to find.

Adjustable-rate loans follow an amortization schedule too, but it is recalculated when the rate resets, so the rows after the first adjustment are only a projection. Our overview of types of mortgage loans compares fixed and adjustable options. Home equity loans amortize much like a first mortgage, while a HELOC's draw period works differently, as covered in our comparison of a HELOC vs a home equity loan.

Escrow. Many lenders collect property taxes and insurance through an escrow account funded from part of your monthly payment, according to the CFPB's escrow explainer. Those amounts change when taxes or premiums change, which is why your total bill can rise while the amortization schedule stays the same; see why your escrow goes up.

HOA dues. The association bills them separately, and they never touch the schedule, though lenders count them when you qualify. Our guide to HOA fees and your mortgage covers both sides.

PMI. Private mortgage insurance is not on the schedule, but the amortization schedule decides when it can end. Under the rules the CFPB summarizes, you can ask to cancel when the balance is scheduled to fall to 80 percent of the home's original value, and the servicer must end it automatically when the balance is scheduled to reach 78 percent, if you are current. For the $400,000 townhouse, 80 percent is $320,000, reached at payment 105, in the ninth year. Seventy-eight percent is $312,000, reached at payment 120. Extra payments can get you there sooner: with $200 a month extra, the balance reaches $320,000 at payment 69, and the CFPB says you can request cancellation early if additional payments bring the balance down to 80 percent. Our guide to what PMI means covers the full rules. FHA mortgage insurance follows different rules, described in our explainer on what an FHA loan is.

Your servicer can provide your amortization schedule, and many online account pages show the current balance and principal paid to date. You can also build one: in a spreadsheet, PMT gives the payment, and IPMT and PPMT give the interest and principal for any payment number.

The schedule matters when you buy as well. If you take over a seller's loan, you inherit the remaining balance, rate and months left, as our guide to assumable mortgage listings explains, which means you start partway down someone else's amortization schedule, with more principal in each payment. A lender or HUD-approved housing counselor can confirm what applies to your loan; this page is general information, not financial advice.

If you are comparing homes in Minneapolis's North Loop or anywhere else, run an amortization schedule for each price on Leevli listings you are considering, then add the costs that sit outside it.

The schedule fixes principal and interest; residents know what the rest of the monthly bill turned out to be.

• How much higher was your total monthly payment than principal and interest alone in the first year?
• How much did your escrow payment change after the first annual analysis?
• Has your servicer applied extra principal payments correctly, or did you have to call to fix them?
• If you had PMI, how long did it take the servicer to remove it after you asked?
• Did anyone in the building assume a seller's loan, and how did the lender handle it?
• How often have HOA dues gone up, and was there a special assessment you had to fund on top of the mortgage?
• Did your insurer raise the premium enough to change your monthly bill?