What Is Amortization?

Amortization is paying off a loan over time with equal, regular payments. Each payment covers the interest charged for that period plus part of the amount you borrowed (the principal), sized so the loan is paid off in full by the last payment. A loan repaid this way is called an amortized loan.

Early on, most of each payment goes to interest because the balance is still large. As the balance falls, less interest is charged, so more of the same payment goes to principal. An amortization schedule shows this payment by payment: how much is interest, how much is principal, and the balance left after each one.

Common amortized loans

Mortgages: home loans, usually over 15 or 30 years.
Auto loans: usually 3 to 7 years.
Student loans: on a standard repayment plan, often 10 years.
Personal loans: fixed-rate loans from banks, credit unions and online lenders, often 1 to 7 years.
Business loans: term loans for equipment, property or growth.

Not every loan amortizes. With an interest-only loan or a loan with a balloon payment, the regular payments don't pay off all of the principal, and a large amount is left to pay at the end. Credit cards and other revolving credit have no fixed schedule at all.

How to Calculate Amortization

Step 1: the monthly payment

PMT = PV \times \frac{i {(1 + i)}^{n}}{{(1 + i)}^{n} - 1}

Where:

PMT: the monthly payment.
PV: the loan amount.
i: the monthly interest rate as a decimal (yearly rate ÷ 12).
n: the number of monthly payments (years × 12, plus any extra months).

At a 0% interest rate there is no interest to spread, so the payment is simply the loan amount ÷ n.

Step 2: split each payment

Each month, the interest is charged on the balance you still owe, and the rest of the payment pays down the principal:

\begin{array}{l} Interest = Balance \times i \\ Principal = PMT - Interest \\ New balance = Balance - Principal \end{array}

Repeat this for every month and you have the amortization schedule. The last payment is adjusted by a few cents so the balance ends at exactly $0.

Example

A $200,000 loan over 15 years at 2% interest:

i = 2% ÷ 12 = 0.0016667, and n = 15 × 12 = 180
PMT = $200,000 × (0.0016667 × 1.0016667¹⁸⁰) ÷ (1.0016667¹⁸⁰ − 1) = $1,287.02 a month
First month's interest = $200,000 × 0.0016667 = $333.33
First month's principal = $1,287.02 − $333.33 = $953.69
Balance after the first payment = $200,000 − $953.69 = $199,046.31

How to Use the Amortization Calculator

"If I borrow $200,000 for 15 years at 2%, what will my monthly payment be, how much interest will I pay in total, and how much of each payment goes to interest?" This calculator answers that.

Let's enter the numbers for this example in each box. They are already filled in when the calculator opens, so you can follow along and then change any box to match your own loan.

Loan Amount: Enter 200,000, which is the amount you borrow. It must be greater than 0.
Loan Term: Enter 15 in the years box and leave the months at 0, which is how long you have to repay. Use the months dropdown (0 to 11) for terms like 5 years and 6 months. Years must be a whole number from 0 to 100, and the term must be at least 1 month.
Interest Rate: Enter 2, which is the yearly interest rate in percent. Enter 0 for an interest-free loan. It must be below 100.
Start Date: Leave it at today's date, which is the day the loan starts. The first payment is due one month later, and this date sets the dates in the schedule and the pay-off date.

Calculate and Reset

Click Calculate to see your results. If a box has a problem, such as a letter in a number box, a message pops up under that box instead. With the default numbers you get:

Your Results: a short summary in words: a monthly payment of $1,287.02, $231,663.04 paid in total, $31,663.04 of it interest, how your first payment splits ($333.33 interest and $953.69 principal), and when the loan is paid off.
Monthly Payment: the headline number, $1,287.02.
Loan Amount, Over 180 Payments, Total Interest and Pay-off Date: you borrow $200,000, pay $231,663.04 in total, of which $31,663.04 is interest, and make your last payment 15 years after the start date.
Chart: the principal and interest you pay each year, and the loan balance going down to zero.
Amortization schedule: every payment split into interest and principal, with the balance left after it. Switch between the yearly and monthly schedule, and use Download CSV to open it in a spreadsheet.
Share Results: a link that opens this calculator with your numbers filled in. Copy it, or share it on Facebook or X.

Amounts of $1 million or more are shortened, for example $1.25M. Click Reset to put every box back to its default number (and the start date back to today) and show the default results again.

Year	Payment	Interest	Principal	Loan Balance
2026	$2,574.04$2,574	$665.07$665	$1,908.97$1,909	$198,091.03$198,091
2027	$15,444.24$15,444	$3,855.97$3,856	$11,588.27$11,588	$186,502.76$186,503
2028	$15,444.24$15,444	$3,622.09$3,622	$11,822.15$11,822	$174,680.61$174,681
2029	$15,444.24$15,444	$3,383.45$3,383	$12,060.79$12,061	$162,619.82$162,620
2030	$15,444.24$15,444	$3,140.00$3,140	$12,304.24$12,304	$150,315.58$150,316
2031	$15,444.24$15,444	$2,891.66$2,892	$12,552.58$12,553	$137,763.00$137,763
2032	$15,444.24$15,444	$2,638.31$2,638	$12,805.93$12,806	$124,957.07$124,957
2033	$15,444.24$15,444	$2,379.80$2,380	$13,064.44$13,064	$111,892.63$111,893
2034	$15,444.24$15,444	$2,116.13$2,116	$13,328.11$13,328	$98,564.52$98,565
2035	$15,444.24$15,444	$1,847.10$1,847	$13,597.14$13,597	$84,967.38$84,967
2036	$15,444.24$15,444	$1,572.66$1,573	$13,871.58$13,872	$71,095.80$71,096
2037	$15,444.24$15,444	$1,292.65$1,293	$14,151.59$14,152	$56,944.21$56,944
2038	$15,444.24$15,444	$1,007.04$1,007	$14,437.20$14,437	$42,507.01$42,507
2039	$15,444.24$15,444	$715.62$716	$14,728.62$14,729	$27,778.39$27,778
2040	$15,444.24$15,444	$418.33$418	$15,025.91$15,026	$12,752.48$12,752
2041	$12,869.64$12,870	$117.16$117	$12,752.48$12,752	$0.00$0
Total	$231,663.04$231,663	$31,663.04$31,663	$200,000.00$200,000	–

Amortization Calculator

Your Results