Mortgage Payment Calculator with Full Amortisation Schedule

Introduction

Every mortgage calculator gives you the payment. Far fewer show you the schedule, and the schedule is where the interesting part lives — specifically, how little of the early years goes toward actually owning the house.

TL;DR: On a 30-year loan at 7.25%, 88% of the first year's payments are interest. You do not cross the halfway point — where more of each payment goes to principal than to interest — until month 246, over twenty years in. That single fact explains why selling in year three costs more than people expect, and why extra principal early is worth so much more than extra principal late.

The formula

The level monthly payment on an amortising loan:

        r(1 + r)^n
M = P × ─────────────
        (1 + r)^n − 1

Where:

• M = monthly payment (principal and interest only)
• P = principal — the amount borrowed, not the purchase price
• r = monthly interest rate — the annual rate divided by 12
• n = total number of payments — years × 12

Two things trip people up. The rate must be monthly, so 7.25% annual is 0.0725 ÷ 12 = 0.00604167. And P is the loan, not the price — on a $350,000 purchase with 20% down, P is $280,000.

An equivalent form you will see written differently but which gives the same answer:

M = P × r / (1 − (1 + r)^−n)

That is the form this calculator uses, because it behaves better when the rate is very small.

Worked example

$350,000 purchase, 20% down, 7.25% over 30 years.

• P = $280,000
• r = 0.0725 ÷ 12 = 0.00604167
• n = 30 × 12 = 360

M = 280,000 × 0.00604167 ÷ (1 − 1.00604167^−360) = $1,910.09 a month

Over 360 payments that totals $687,634 — so $407,634 of interest on a $280,000 loan. You repay nearly two and a half times what you borrowed.

Add taxes at $4,200 and insurance at $1,800 and the actual monthly outlay is about $2,410.

Why the first year is almost all interest

Interest is charged on the outstanding balance. In month one the balance is the whole loan, so the interest charge is at its maximum:

$280,000 × 0.00604167 = $1,691.67 of interest

The payment is $1,910.09, so principal gets what is left: $218.43. That is 11.4% of the payment going toward ownership.

By month 360, the balance is nearly zero, so almost nothing is interest and essentially the whole payment retires principal. The schedule below shows the crossover.

This is not a trick or a fee. It is arithmetic, and it is the same on every amortising loan. But it has three consequences worth internalising:

Selling early is expensive. Three years in, you have paid about $60,000 in interest and retired $8,755 of principal — you have bought 3% of the house. Add closing costs on both ends and a short hold rarely works on appreciation alone.

Extra principal early is worth far more than extra principal late. A dollar of principal paid in month one saves you the interest on that dollar for 359 months. The same dollar in month 300 saves 60 months of interest. Same dollar, roughly six times the effect.

Rate matters more than price on a long hold. A one-point rate change on $280,000 moves the payment by $193 a month and the lifetime interest by about $69,600.

What extra principal buys

Set the extra principal field and the calculator reports both the interest saved and how much earlier the loan retires. On the defaults, $200 a month extra:

• Payoff moves from 360 months to 269 — seven and a half years earlier
• Interest falls by about $120,800

That is a large return for $200 a month, and it comes with no market risk. The counter-argument is opportunity cost: money into principal is money not invested elsewhere, and it is illiquid until you sell or refinance. For an investor specifically, capital tied up in extra principal is capital not available for the next down payment — which is why many investors deliberately do not prepay.

The escrow lines are not part of the loan

Taxes, insurance and HOA are collected with your payment but they are not interest and they do not amortise. They rise over time, independently of the loan, and they continue after the loan is repaid. The calculator keeps them separate for that reason — the amortisation schedule covers principal and interest only, which is what "amortisation" means.

For an investment property, note that the escrow lines are also the ones you can influence. Insurance is competitively priced and frequently overpaid; assessments can be appealed. The interest rate is fixed the day you close.

FAQ

Why is my actual payment higher than the calculated principal and interest?

Because your payment includes escrow — property taxes, homeowners insurance, HOA dues, and mortgage insurance if you have it. Only principal and interest amortise. Enter your escrow figures above to see the full monthly outlay.

How much of my mortgage payment goes to principal?

At the start, very little. On a 30-year loan at 7.25%, 11.4% of the first payment retires principal and the rest is interest. That share rises every month as the balance falls. Open the schedule and read down the principal column to see the curve.

Does making one extra payment a year really help?

Yes, meaningfully. One extra monthly payment a year is roughly equivalent to adding 1/12 of the payment each month — on the example above, $159 monthly, which takes about six years and five months off a 30-year loan. Bi-weekly payment plans work through exactly this mechanism, which is why you should never pay a servicer a fee to set one up.

Is a 15-year mortgage better than a 30-year?

It costs far less in total interest and builds equity much faster, but the payment is about 34% higher — $2,556 against $1,910 on the example above. For an investor, the higher payment lowers cash flow and DSCR, which can affect both the deal's viability and your ability to finance the next one. Owner-occupants optimise for total cost; investors usually optimise for coverage and flexibility.

What is the difference between interest rate and APR?

The interest rate determines your payment. APR folds in points and certain lender fees, expressed as an annual rate, so it is a better basis for comparing offers. Neither is a good measure of a short hold — for that, total cost over your actual holding period is what matters. See the hard money calculator for why.

Can I use this for a commercial or DSCR loan?

For the payment, yes — amortisation maths is the same regardless of who lends. Two caveats: many investor loans amortise over 30 years but balloon at 5 or 10, so the schedule beyond the balloon is hypothetical; and interest-only loans have no principal component until the IO period ends.

Conclusion

The payment is the easy part. Open the schedule, find the month where principal overtakes interest, and check it against how long you actually intend to hold. If you plan to sell or refinance long before that crossover — as most investors do — then the total-interest figure is not the number that matters to you, and the balance remaining at your exit month is.