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Mortgage Amortization Calculator
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Mortgage Amortization Calculator

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Use our Mortgage Amortization Calculator to understand how your principal and interest payments change and how your mortgage balance gets paid off over time.  From a technical standpoint, amortization is based on a mathematical formula that calculates the exact monthly payment required to both pay your lender the interest they are due according to the terms of your mortgage while also paying off your mortgage balance in full over the course of your loan.  From a mortgage borrower's standpoint, amortization determines your monthly mortgage payment, and this is where the mathematical formula and practical application of amortization collide.  This is because your mortgage payment is comprised of both principal and interest and that composition changes a little with every payment, even though the payment you make to the lender never changes, which is one of the main advantages of a fixed rate loan.
For example, let's say your monthly mortgage payment is $2,000. One month, that payment may consist of $1,500 in interest and $500 in principal.  The next month, your mortgage payment is still $2,000 but the breakdown is $1,475 in interest and $525 in principal.  The split between principal and interest gradually shifts over the course of your mortgage but your monthly payment remains the same.  With each payment, you payoff a small amount of your mortgage which means you owe the lender less in interest expense, which in turn increases the principal component of your next payment.  In short, less interest expense means you have more room in your payment to pay down your loan balance.  This dynamic is why at the beginning of your mortgage, your payment consists of mostly interest -- because your loan balance is high -- and toward the end of your mortgage your payment is mostly principal because your required interest payment is lower as your loan balance slowly declines.
Our Amortization Calculator produces a chart that shows you the split between principal and interest payments annually and how this split changes as your principal balance gets paid down over the course of your loan. As you can see from the chart, amortization does not work in a straight line, meaning that for a 30 year mortgage you have not paid off half of your mortgage at the halfway point of the loan, which is year 15.  In fact, depending on your mortgage rate and other factors it can take longer than 20 years to pay down half of the loan for a 30 year fixed rate mortgage.  Although the amortization formula used to calculate your payment never changes, the amortization schedule is unique for every loan based on the interest rate, mortgage length, loan amount and program and all of these inputs are used in our calculator.  
Understanding how amortization works is important because it enables you to understand your loan balance over the course of your mortgage.  You can use this information to determine how much equity you have in your home which is useful if you are considering refinancing your mortgage or taking out a home equity loan.  Understanding the how your interest and principal payments change over time also has tax implications and means that your mortgage tax deduction is higher at the beginning of your loan and decreases over your loan term.  We recommend that you use our Mortgage Amortization Calculator to determine the principal balance and payment composition for any mortgage based on the loan term and interest rate.   

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Rate Details*
Loan Program:  
Monthly Payment:  
APR:  
Rate:  
Points  More Info:
Points: Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
 
Total Lender Fees:  
Loan type:  
Property Value:  
Loan to Value:  
Credit Rating:  
Date Submitted:  
Monthly Housing Payments
P & I More Info
Principal & Interest: A periodic payment, usually paid monthly, that includes the interest charges for the period plus an amount applied to the reduction of the principal balance.
Mortgage Insurance More Info
Mortgage Insurance: The monthly cost for a policy that protects the lender in case you’re unable to repay the full amount of the loan. It is typically required for loans that have a loan-to-value ratio between 80% to 100%.
(Estimated)
Property Tax More Info
Property Tax: (Also called "Real Estate Tax.") Property taxes are government assessments on real estate property. With mortgage financing, the local, county or state tax assessment on real estate property is considered part of the monthly housing obligation and typically collected and set aside by the lender ...
(Estimated)
Homeowner Insurance More Info
Homeowner Insurance: or also commonly called hazard insurance, is the type of property insurance that covers private homes. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one’s home, its contents, loss of its use, or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.lender ...
(Estimated)
Homeowner Association Fee More Info
Homeowner Association fee: (HOA) fees are funds that are collected from homeowners in a condominium complex to obtain the income needed to pay (typically) for master insurance, exterior and interior (as appropriate) maintenance, landscaping, water, sewer, and garbage costs.
(If Any)
Total Monthly Housing Payments
Lender Fees
Points More Info
Points Fees you are willing to pay in order to get a lower interest rate. The number of points refers to the percentage of the loan amount that you would pay. For example, "2 points" means a charge of 2% of the loan amount.
Origination Fee More Info
Origination Charge: A loan origination charge is a fee charged by the lender for evaluating, processing, and closing the loan.
Credit Report Fee More Info
Credit Report Fee: Fee charged to obtain an applicant’s credit history prepared by one or all of the three major credit bureaus. Used by lender to determine the borrower’s creditworthiness.
Tax Service Fee More Info
Tax Service Fee: A fee charged by the lender to cover the cost of retaining a tax service agency. These agencies monitor the property tax payments on the property and report the results to the lender.
Processing Fee More Info
Processing Fee: A processing fee is a charge by the lender for clerical items associated with the loan. Examples of processing include loan set up, organization of loan conditions for underwriting, and preparing required disclosures for the borrower.
Underwriting Fee More Info
Underwriting Fee: A fee charged by the lender to verify information on the loan application, authenticate the property’s value, and perform a risk analysis on the overall loan package.
Wire Transfer Fee More Info
Wire Transfer Fee: In most cases lenders wire funds to escrow companies to fund a loan. Commercial banks that perform this function will charge the lender so the fee is generally passed on to the borrower.
(If Any)
FHA Upfront Premium More Info
FHA Upfront Premium: A fee paid in cash at the close of escrow or more commonly it is financed into the loan. These premiums are pooled together by the FHA and are used to insure the risk of borrower default on FHA loans. FHA upfront premiums are prorated over a five year period, meaning should the homeowner refinance or sell during the first five years of the loan, they are entitled to a partial refund of the FHA upfront premium paid at loan inception.
(If any)
VA funding Fee (If any)
Flood Fee
Other Fees More Info

Other fees could be either additional Administrative Fees that a lender charges or it could be a Flat Fee to cover all lender charges such as: (Origination Fees, Points, Underwriting and Processing Fees, Credit Reports and Tax Service Fees)

The flat fee does not include prepaid items and third party costs such as appraisal fees, recording fees, prepaid interest, property & transfer taxes, homeowners insurance, borrower’s attorney’s fees, private mortgage insurance premiums (if applicable), survey costs, title insurance and related services.

Total Lender Fees
*Actual rates and other information may vary. Sponsored results shown only include participating lenders. The information you enter on this page will only be shared with lenders you choose to contact, either by calling the phone number or requesting a quote.
Current Mortgage Rates as of December 13, 2018
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click here for more information on rates and product details.
While we pride ourselves on the quality and breadth of the FREEandCLEAR mortgage calculators please note that they should be used for informational purposes only. Our calculators rely on assumptions by us and inputs and assumptions provided by you, which may be inaccurate. The outputs from our calculators are estimates only and should not be used as the sole basis for making any financial decisions. Always consult multiple financial professionals when determining the mortgage size and program that is appropriate for you.

What is Mortgage Amortization?

1

How Your Mortgage Gets Paid Down

Mortgage amortization is the "mechanism" or formula that determines how your mortgage gets paid off over time.  Unless you have any interest only mortgage, when you make a mortgage payment your payment is comprised of principal and interest.  The principal component of your mortgage payment goes to paying down your mortgage balance while the interest component of your payment goes to the lender as payment for borrowing the money.  Although your monthly payment does not change, the split between principal and interest changes a little every month.  An amortization formula determines the split between principal and interest for each payment as well as the monthly payment that allows you to pay off your mortgage balance over the life of your loan.  From the borrowers standpoint, you make the same monthly mortgage payment over the course of your mortgage while amortization ensures that your loan is paid in full with your final payment and the lender receives the interest due according to the terms of your loan.  Use our Mortgage Amortization Calculator to understand how your loan balance gets paid off over the course of your mortgage.

2

Your Mortgage Payment is Mostly Interest in the Beginning, Principal at the End

In the beginning of your mortgage, your payment is comprised of mostly interest and relatively little principal.  The mix between interest and principal changes a little every monthly and your payment is comprised of mostly principal by the end of your mortgage.  It is also important to highlight that mortgage amortization does not work "evenly" over the course of your loan.  In other words, you have not paid off half of your mortgage at the halfway point of your loan.  For example, for a $380,000 30 year fixed rate mortgage with a 4.0% interest rate, your mortgage balance is approximately $245,000 at the end of year fifteen, or the halfway point, which means you have only paid off $135,000 of your mortgage.  Using the same example, the loan is not half paid-off until after year nineteen.  For a 30 year fixed rate mortgage, it takes approximately nineteen to twenty three years to pay-off half the loan amount, depending on your interest rate.  Our Mortgage Amortization Calculator produces a chart that shows you how your principal and interest payments change over your loan term. 

3

Amortization Works Differently for Different Types of Mortgages

Amortization for a fixed rate mortgage works differently than for an adjustable rate mortgage (ARM). With a fixed rate mortgage, the mortgage term used to determine the mortgage amortization schedule does not change over the life of the loan.  For example, the monthly mortgage payment for a 30 year fixed rate mortgage is always based on a 30 year mortgage term.  With an adjustable rate mortgage, the mortgage balance re-amortizes over the remainder of the mortgage term every time the interest rate adjusts.  For example, at the end of year 18 of an ARM, the monthly payment is based on the current loan balance, new interest rate and a twelve year loan term (because the mortgage has twelve years remaining).  While amortization is relatively straightforward for a fixed rate mortgage, borrowers should understand how it can impact the monthly payment for an ARM over the life of the loan.  With our Mortgage Amortization Calculator, you can select the type and length of mortgage you want to analyze.

4

Why Mortgage Amortization Matters

Although math formulas are not usually that exciting, mortgage amortization should capture the attention of all borrowers.  In short, amortization not only determines your monthly payment but it also allows you to know your loan balance at any point in time. If you are looking to payoff or refinance your mortgage, knowing your exact loan balance is very relevant information.  It is also helpful to track how your homeowner equity grows over time as you pay down your loan and hopefully your property value appreciates.  Finally, mortgage amortization can impact your tax bill as your interest expense is highest the first several years of your loan.  The higher your interest expense, the greater your mortgage tax deduction.  It is also important to understand that given the way amortization works your tax benefit typically fades over time as you pay more principal and less interest.  

More FREEandCLEAR Mortgage Resources

Mortgage Guides

How Mortgage Amortization Works

Understand how mortgage amortization works and how the split between principal and interest that comprises your monthly payment changes over the course of your mortgage 

Resources

What Length Mortgage Should I Choose?

Understand how the length of your mortgage affects your monthly payment and total interest expense over the life of your loan

Resources

Mortgage Rates

Compare mortgage rates and fees for top lenders near you.  Comparing multiple mortgage proposals is the best way to find the mortgage with the lowest rates and fees

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Mortgage Expert

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Sources

Mortgage Amortization: https://www.consumerfinance.gov/ask-cfpb/how-does-paying-down-a-mortgage-work-en-1943/

About the calculator developer

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

Michael Jensen LinkedInLinkedIn | Email Michael JensenEmail
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