How to Read a Mortgage Amortization Schedule
A mortgage payment looks like one number, but it is really principal plus interest - and the split changes every month. This guide explains the formula and how to read the schedule, so you can see where your money goes.
How to Read a Mortgage Amortization Schedule
A mortgage payment looks like one number, but it is really principal plus interest - and the split changes every month. This guide explains the formula and how to read the schedule, so you can see where your money goes.
What amortization means
Amortization spreads a loan into equal payments. Early payments are mostly interest because the balance is high; later payments are mostly principal. By the end of the term the balance reaches zero and the loan is repaid.
The monthly payment formula
The payment comes from the annuity formula M = P × r(1+r)^n / ((1+r)^n − 1), where P is the principal, r the monthly rate (annual rate ÷ 12 ÷ 100) and n the number of months. Total interest is M × n − P.
Reading the schedule
Each row shows the payment split into principal and interest plus the remaining balance. Watch the interest column shrink and the principal column grow: that crossover is why overpaying early saves far more than overpaying late.
How extra payments help
An extra payment goes straight to principal, so it removes the interest that principal would have earned for every remaining month. Paying biweekly, or adding one extra payment a year, can cut years off a 30-year loan.
What the number excludes
The result is principal and interest only. Add property tax, homeowner’s insurance and, if your down payment is under 20%, private mortgage insurance to get the full monthly housing cost.
Frequently asked questions
What is the formula for a monthly mortgage payment?
M = P x r(1+r)^n / ((1+r)^n - 1), where P is principal, r the monthly rate (annual rate / 1200) and n the number of months.
How much total interest will I pay?
For a 300,000 loan at 6% over 30 years the total interest is about 347,514 - more than the principal itself.
Does the calculator include tax and insurance?
No, it is principal and interest only. Add annual tax / 12 and insurance / 12 to get the full monthly cost.
Can I see the full schedule?
The calculator shows the first 12 months; for a full 360-month table use a dedicated amortization tool.