Amortization Calculator Definition
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Further Reading
Deep dive into the math and concepts with our comprehensive guides.
How Mortgage Amortization Works
Understand the timeline of your home loan. Learn why early mortgage payments consist mostly of interest and how extra payments can save you thousands.
How Loan Amortization Works
A detailed breakdown of how your monthly loan payments are applied to principal and interest over time.
Core Glossary Term
Read the formal mathematical definition.
Worked Examples
Step-by-step calculations showing how to apply this concept.
Buying a $400,000 Home with 20% Down
By putting 20% down, the buyer avoids Private Mortgage Insurance (PMI). However, over the 30-year term at a 6.5% interest rate, the buyer will actually pay more in interest ($408,144) than the original loan amount itself ($320,000).
View in Calculator →Frequently Asked Questions
What is an amortization schedule?
It is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off.
Why do early payments consist mostly of interest?
Because interest is calculated on the remaining balance. Since the balance is highest at the start of the loan, the interest charge is also at its highest.