| Year | Principal Paid | Interest Paid | Remaining Balance |
|---|
What This Calculator Estimates
This calculator estimates your monthly mortgage payment and shows a year-by-year breakdown of how much goes to principal versus interest, and how your remaining balance declines over the loan term.
Formula / Method Used
Monthly Payment = P × [r(1+r)^n] / [(1+r)^n − 1], where P is loan amount, r is monthly interest rate, and n is total number of payments. Each month, interest is charged on the remaining balance, and the rest of the payment reduces principal.
Worked Example
A $300,000 loan at 6.5% over 30 years has a monthly payment of about $1,896. In year 1, roughly $1,920 goes to principal and $20,830 to interest — the split gradually reverses as the balance declines.
How to Interpret the Result
The yearly table shows how slowly principal builds early in the loan. Making extra principal payments, especially in the early years, can meaningfully cut total interest paid over the life of the loan.
Common Mistakes
- Confusing the quoted monthly payment with total monthly housing cost (PITI).
- Assuming principal and interest split evenly every month.
- Not considering extra payments as a way to reduce total interest.
- Ignoring how refinancing resets the amortization clock.
Related Calculators
Mortgage Calculator · Refinance Calculator · Down Payment Calculator
Frequently Asked Questions
What does mortgage amortization show?
It shows how each monthly payment splits between interest and principal over the life of the loan, and how your remaining balance declines.
Why do early payments go mostly to interest?
Interest is calculated on the remaining balance, which is highest early in the loan, so more of each payment covers interest at first.
What is total interest paid?
Total interest paid is the sum of all interest charges over the full loan term, which can exceed the original loan amount on long terms.
Does extra principal payment help?
Yes, paying extra toward principal reduces the balance faster, cutting total interest and shortening the loan term.
Does this include taxes and insurance?
No, this calculates principal and interest only. Property tax and insurance (PITI) are separate costs.
Last updated: July 2026