Amortization Calculator

Amortization is the word for a debt that dies on a schedule. Your payment never changes, but what it buys changes every single month, and this calculator exists to show you that shift row by row, with a real due date attached to each one. The level payment comes from the present-value relationship in Regulation Z, 12 CFR Part 1026 Appendix J(b)(8), with the periodic rate taken as a nominal division of the annual rate under (b)(1) — so 6.5% a year is 6.5/12 a month, not a compounded twelfth root. From there Appendix J(a)(2) gives the recurrence the schedule follows: increase the unpaid balance by the finance charge earned in the period, then decrease it by the payment. Concretely, each row charges interest of balance x rate / 1200, rounds it to the cent, applies everything left over from the payment to principal, and carries the reduced balance into the next row. Term is entered as years plus months, so a 27-year-and-4-month remaining schedule is expressible without rounding to something neater. What the table reveals is the split, and it moves far more slowly than intuition suggests. On a 30-year loan at a typical rate, the first payment is overwhelmingly interest and only a sliver of principal. The crossover — the month where principal finally exceeds interest — does not fall halfway through the term. It falls well into the second half, and the higher the rate, the later it comes. That is not a fee structure or a lender trick; it is arithmetic. Interest is charged on what you still owe, you owe almost everything at the start, so the fixed payment has almost nothing left over after interest is taken. The consequence people find genuinely startling is how little principal a full year of payments retires early on, and how much a single year retires near the end. An optional extra-payment field adds a fixed amount of principal to every row. Because the balance falls faster, every subsequent interest charge is smaller, the schedule ends early and the row count shrinks — you see the exact month the loan disappears rather than a savings estimate. The detail most schedules get wrong is the calendar. Each due date here is computed from the original start date, not by advancing the previous due date. That distinction matters for a loan that starts on the 31st: advancing month by month would give 31 January, then 29 February, then 29 March, and the schedule would quietly drift off the contractual month end forever. Appendix J(b)(3)(iv) treats full months as the same point in successive months and uses the last day of February where necessary, which is exactly what computing from the origin reproduces. Interest is rounded to the cent before principal is applied, month by month, because that is what a servicer does — a closed-form total will differ from your real payoff statement by a few dollars over 30 years. The final row absorbs the accumulated residue so the balance ends at exactly zero, which is why the last payment is often a few cents off the others. This schedule is principal and interest only; escrow for property tax and insurance sits outside it. To see the full monthly figure with taxes, insurance and PMI stacked on, use the mortgage calculator. The same engine also drives non-mortgage debt, so a car or consolidation loan can be scheduled here or on the personal loan calculator.