Know the real cost of borrowing.
Break down any loan or mortgage into its monthly payment, total interest, and a full payoff schedule. See exactly how extra payments save you money.
Mortgage and loan calculator
Payment breakdown
Debt-free in -Mortgage balance over time
Amortization schedule
| Period | Principal | Interest | Total interest | Balance |
|---|
What amortization actually does to your money
A mortgage payment is the same number every month, but what it buys changes completely from the first payment to the last. That schedule, not the interest rate on its own, is what makes a loan expensive. The figures below come from this page's default $400,000 home with 20% down at 6.5% over 30 years.
You borrow $320,000 and repay $728,142
The headline is the total. On a $320,000 loan at 6.5%, the interest comes to $408,142, which is more than the loan itself. Add the principal back and the total of payments is $728,142 for a house that cost $400,000.
Rate and term drive this far more than most people expect, because interest compounds over 360 payments. This is why a rate that looks a fraction of a point better is worth chasing, and why the term you choose matters as much as the price you negotiate.
Early payments are almost entirely interest
Amortization charges interest on whatever you still owe, so at the start, when you owe the most, nearly all of the payment is interest. In year one you pay $24,272 and only $3,577 of it reduces the balance. The other $20,695 is rent on the money.
The schedule on this page shows when that flips. Principal does not overtake interest until year 20, at $12,257 against $12,014. You spend two thirds of a 30-year mortgage paying mostly interest, which is the real reason selling after a few years leaves so little equity: you have barely started repaying the loan.
Extra payments work because they skip the interest entirely
An extra payment goes straight to principal. Every dollar of principal you remove early is a dollar that never accrues interest again for the remaining term, which is why the returns look so large. Put $200 a month extra against this loan and you save $105,429 in interest and finish 6 years 7 months early.
Those extra payments add up to about $56,200 over the shortened term, and they cut the total you hand over from $728,142 to $622,714. The catch is liquidity: money sent to the mortgage is very hard to get back without selling or refinancing, and paying down a 6.5% loan is only the best use of the cash if you have no higher-rate debt and an emergency fund already sitting somewhere you can reach.
The payment is not just principal and interest
Lenders quote PITI: principal, interest, taxes and insurance. Here the loan itself costs $2,022.62 a month, but property tax adds $366.67 and insurance $125, so the real monthly cost is $2,514. That is 24% more than the number a rate calculator would show you.
Below 20% equity most lenders also charge private mortgage insurance, which protects them rather than you and is why 20% down is a common target. This calculator drops PMI automatically once the balance falls under 80% of the home's value. In practice you usually have to ask, and the rules differ depending on whether you reach that point by paying down the loan or by the house appreciating.
What this calculator leaves out
It only covers borrowing to buy. If you are weighing an auto loan against a lease, the loan mode here handles the loan side and the auto lease calculator breaks the lease into depreciation, finance charge and tax so the two are comparable. It assumes a fixed rate and a payment you never miss. It does not model closing costs, points paid to buy the rate down, refinancing, or an adjustable rate resetting. It also holds property tax and insurance flat, when both generally rise over 30 years, so the later monthly figures are optimistic.
The mortgage interest deduction is deliberately excluded. It only helps if you itemize, and since the standard deduction rose, most households do not. Including it by default would overstate the benefit of buying for the majority of people. If you know you itemize, treat the interest figures here as the pre-tax version.
Unfamiliar term? The course glossary defines the fifty this site actually uses, in the sense this site uses them.
Common questions
What is amortization?
Amortization is the schedule by which a loan is paid off. Each payment is split between interest and principal. Early payments are mostly interest, and the balance shifts steadily toward principal over the life of the loan.
When does PMI come off a mortgage?
Private mortgage insurance is generally required when you put less than 20 percent down, and it typically drops off once the balance reaches 80 percent of the original value. This calculator shows the month that happens.
How much do extra payments really save?
A great deal, because every extra dollar goes straight to principal and removes all future interest on that dollar. The calculator shows both the interest saved and how much sooner the loan clears.
What does PITI mean?
Principal, interest, taxes, and insurance. It is the full monthly cost of owning rather than just the loan payment, and it is what lenders look at when judging what you can afford.
How this works: payments are computed with the standard amortization formula and simulated month by month. Mortgage mode adds property tax, insurance, PMI (which automatically drops once you reach 20% equity) and HOA to your monthly total. Estimates for planning and education only. Your actual rate, taxes, and insurance will vary. This is not financial advice.