Quick answer
An amortization calculator lays out a loan month by month: payment, interest, principal and remaining balance. A $360,000 mortgage at 6.85% over 30 years has a payment of $2,358.93 — and a total interest bill of $489,216, more than the loan itself. In year one you pay $24,543 of interest and reduce the debt by only $3,764.
How the Mortgage Amortization works, step by step
Enter the home price, down payment, rate and term. The calculator fixes the payment that clears the loan exactly on schedule, then builds the full table: each month, interest is charged on the outstanding balance, the remainder of the payment reduces principal, and the balance steps down. The yearly view rolls the same schedule up by year, with the balance at each year-end.
Early payments are mostly interest because the balance is at its largest; the principal share grows every month as the balance falls. In month one, $2,055 of the $2,358.93 payment is interest and $303.93 is principal. Halfway through the loan you have not repaid half the money — after 15 years the balance is still about $264,911 of the original $360,000, and principal does not exceed interest in a monthly payment until month 240.
The calculator also runs the schedule with an extra monthly payment, so the saving is exact. Adding $200 a month to this loan clears it in 286 months instead of 360 and cuts total interest from $489,216 to $370,490 — a saving of $118,726 for $57,200 of extra payments. Extra paid early is worth most, because it avoids interest for the longest time.
Use the yearly view to plan. The schedule shows your balance at any future date (what you would owe if you sold or refinanced), the interest you will pay in any year (the figure your lender reports on Form 1098), and how extra payments rewrite the end of the schedule. The balance column is the payoff figure a sale or refinance has to clear.
The interest column also settles the tax question. Mortgage interest is deductible if you itemise, on acquisition debt up to $750,000 for loans taken out after December 2017 — a cap the 2025 tax law made permanent. But for 2026 the standard deduction is $16,100 single and $32,200 married filing jointly, so most households still take the standard deduction and get no benefit from the interest they pay.
The formula
Payment = Loan × [r(1 + r)^n] ÷ [(1 + r)^n − 1]. Each period: interest = balance × r; principal = payment − interest; new balance = balance − principal, where r is the monthly rate and n the total payments. Extra payments add directly to principal.
Worked example — try it on the calculator above
Worked example: $360,000 at 6.85% for 30 years
Payment: $2,358.93. Month one: interest $2,055, principal $303.93, balance $359,696.07. In year one you pay $28,307 and reduce the debt by only about $3,764, while $24,543 goes to interest. Total paid over 360 months: $849,216, of which $489,216 is interest. Add $200 a month and the loan clears in month 286 — 74 months early — with $370,490 of interest, saving $118,726. The crossover point where principal first exceeds interest in a monthly payment arrives in month 240 — 20 years in.
Frequently Asked Questions
Why is so much interest charged at the start?
Because interest is charged on what you owe, and you owe the most at the start. The rate never changes; the balance it applies to does. There is no front-loading rule to negotiate away — any loan at 6.85% on a $360,000 balance costs $2,055 in its first month, whatever the payment schedule.
What does an extra payment do to the schedule?
It removes principal immediately, so every subsequent month's interest charge falls. Extra paid early is worth most, because it avoids interest for the longest time. Adding $200 a month to the example loan saves about $118,726 of interest and shortens the loan by 74 months — the calculator's with-extra column shows the exact new schedule.
Does amortization apply to interest-only loans?
No — interest-only payments do not amortise at all; the balance is unchanged until the interest-only period ends, when payments jump to amortise the full amount over the remaining term. The calculator's schedule assumes a fully amortising loan, which covers most fixed-rate mortgages.
Can I see how much interest I will pay this tax year?
Yes — sum the interest column for the 12 payments falling in the calendar year. That is the figure your lender reports on Form 1098. Mortgage interest is deductible if you itemise, on acquisition debt up to $750,000 for loans taken out after December 2017, but for 2026 the standard deduction is $16,100 single and $32,200 married filing jointly, so most households take the standard deduction instead.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.