Understanding Mortgages and Amortization
A mortgage payment stays the same each month, but early on most of it goes to interest. Over time, more goes to principal.
What is Amortization?
Amortization means paying off a loan in equal installments. Each payment covers some interest and some principal. Early in the loan, the balance is high so interest is high. As you pay down principal, the interest portion shrinks and more of each payment goes to principal.
📊 Use our Mortgage Calculator to see your monthly payment and full amortization schedule.
The Formula
Monthly payment = P x [r(1+r)^n] / [(1+r)^n - 1], where P is loan amount, r is monthly rate (annual / 12), n is number of payments. The calculator handles this for you.
What Affects Your Payment?
- Loan amount — Higher principal means higher payments
- Interest rate — A higher rate increases both payment and total interest
- Term — Shorter term (e.g. 15 years) means higher payments but less total interest
What the Calculator Excludes
This calculator shows principal and interest only. Real monthly costs often include property taxes, insurance, and PMI (if down payment is under 20%). Your lender will provide a full estimate.
For informational purposes only. Not financial advice.