This tool quickly calculates your fixed monthly payment and generates a detailed schedule showing how you pay down your loan over time.

See how different interest rates and terms affect your payment and total interest.

Here is exactly how the calculator derived your payment using the standard amortization formula. Each step shows the formula and the substituted values.

Amortization is the financial engineering that turns a large lump-sum debt into a series of equal, manageable payments. Every fixed-rate installment loan — mortgage, auto, personal, student — uses the same underlying structure: a payment sized so that it covers the current month's interest charge and reduces the principal, with the balance declining to exactly zero at the final payment.

The formula is derived from the present value of an annuity: it sets the sum of all discounted future payments equal to the original loan amount. The result is a payment that is identical every month in dollar amount — but whose internal composition changes dramatically over time.

Once your payment is established, every month follows the same two-step sequence:

1. Interest charge: Remaining Balance × monthly rate. This amount goes entirely to the lender.
2. Principal reduction: Payment − interest charge. This amount reduces your outstanding balance.

On a $300,000 mortgage at 7% for 30 years: monthly payment is $1,996. In month 1, the interest charge is $300,000 × 0.005833 = $1,750 and the principal reduction is $1,996 − $1,750 = $246. The balance after payment 1 is $299,754. In month 2, the interest charge is $299,754 × 0.005833 = $1,749 — one dollar less than month 1 — and an extra dollar more goes to principal. This compounding shift accelerates slowly at first, then rapidly in the final years.

The most under-appreciated fact about mortgage amortization is this: on a standard 30-year loan, you will pay more than half of your total lifetime interest before you reach the halfway point of your term. For most homeowners, this is a $100,000+ surprise that was always visible in the amortization schedule — they just never looked.

The mechanism is straightforward: interest is a percentage of the current balance. When the balance is at its peak — month 1 — the interest charge is at its peak. Every subsequent month, the balance is slightly lower, so the interest charge is fractionally smaller, and fractionally more of your fixed payment reduces principal. On a 30-year mortgage, the crossover point — the month when principal paid first exceeds interest paid in a single payment — occurs around year 21, not year 15.

In your first 5 years of a 30-year $350,000 mortgage at 7%, you make 60 payments totaling approximately $139,700. Of that: roughly $117,000 goes to interest, and only $22,700 reduces your balance. Your equity after 5 years of payments is just 6.5% of the original loan — before accounting for any appreciation. This is why homeowners who sell 3–5 years after buying often find that closing costs consume most or all of their built equity.

The amortization formula is universal, but the way it plays out differs dramatically by loan term. Term length is the single most powerful variable in determining how quickly principal reduces and how much total interest you pay.

The 30-year mortgage costs 81× more in total interest than the 5-year auto loan despite borrowing only 10× more money. Term length, not loan size, is the dominant driver of total interest paid.