Key takeaways

  • Mortgage amortization refers to the split between how much of your loan payment goes toward principal vs. interest.
  • In the beginning of your loan, a larger portion of your payment is put toward interest, but this reverses as your loan matures.
  • You can use your amortization schedule to come up with the best repayment strategy for your needs.

Over time, the portion of your monthly mortgage payment that’s paid to principal and interest varies according to your amortization schedule. Understanding your amortization schedule can help you make informed decisions about how best to pay off your loan, and the length of time and cost it will take to do so.

What is mortgage amortization?

Mortgage amortization describes the process in which a borrower makes installment payments to repay the balance of the loan over a set period of time. These payments are divided between principal, or the amount borrowed, and interest, or what the lender charges to borrow the funds. Lenders structure loans this way partly to lower their risk if the borrower were to stop making payments.

The longer the loan amortization period, the lower your monthly payment. That’s because the longer you spread out your payments, the less it will cost you each month, simply because there’s more time to repay.

The downside to a longer loan term, however, is more money spent on interest. In addition, because the interest payments are frontloaded with a longer mortgage, it takes more time to really make a dent in the principal and build equity in your home — a factor to consider when comparing your loan options.

Amortization with fixed-rate mortgages

With a fixed-rate mortgage, the monthly payments remain the same throughout the loan’s term. However, each time you make a payment, the amount of your payment that goes to the principal differs from the amount that gets applied to interest, even though you make each payment in equal installments.

As your loan matures, you can expect a higher percentage of your payment to go toward the principal, with a lower percentage going toward the interest.

— Nishank KhannaChief Marketing Officer, Clarify Capital in New York City

Amortization with adjustable-rate mortgages

On the other hand, an adjustable-rate mortgage (ARM) comes with a fixed interest rate for an initial period (usually between three and 10 years). After that, your rate — and, therefore, your monthly mortgage payment — will change every six or 12 months, depending on the type of ARM you have.

Like fixed-rate mortgages, you’ll pay a bigger chunk toward the interest at first. Over time, this will shift, so more of your payment goes toward the loan principal.

What is a mortgage amortization schedule?

A mortgage amortization schedule or table is a list of all the payment installments and their respective dates. Mortgage amortization schedules are complex and most easily done with an amortization calculator. You can use Bankrate’s amortization calculator to find out what your amortization schedule will be based on the loan terms you input.

“A calculator is needed because of the number of variables involved, including the number of compounding periods, interest rate, loan amount and final balance,” says Trevor Calton, president of Evergreen Capital Advisors in Portland, Oregon.

You can also request a bank amortization schedule from your bank or lender.

Mortgage amortization schedule example

Let’s assume you took out a 30-year mortgage for $300,000 at a fixed interest rate of 6.5 percent. At those terms, your monthly mortgage payment (principal and interest) would be just over $1,896, and the total interest over 30 years would be $382,633.47.

Here’s a snippet of what your loan amortization schedule in this example would look like in the first year of the loan term (assuming you got the loan in 2023):

Sample Amortization Schedule
Year Month Payment Principal Interest Balance Total Interest Total Principal
2023 September $1,896.20 $271.20 $1,625.00 $299,728.80 $1,625.00 $271.20
2023 October $1,896.20 $272.67 $1,623.53 $299,456.12 $3,248.53 $543.88
2023 November $1,896.20 $274.15 $1,622.05 $299,181.97 $4,870.58 $818.03
2023 December $1,896.21 $275.64 $1,620.57 $298,906.34 $6,491.15 $1,093.66
2024 January $1,896.21 $277.13 $1,619.08 $298,629.21 $8,110.23 $1,370.79
2024 February $1,896.20 $278.63 $1,617.57 $298,350.58 $9,727.80 $1,649.42
2024 March $1,896.21 $280.14 $1,616.07 $298,070.44 $11,343.87 $1,929.56
2024 April $1,896.21 $281.66 $1,614.55 $297,788.79 $12,958.42 $2,211.21
2024 May $1,896.20 $283.18 $1,613.02 $297,505.60 $14,571.44 $2,494.40
2024 June $1,896.21 $284.72 $1,611.49 $297,220.89 $16,182.93 $2,779.11
2024 July $1,896.21 $286.26 $1,609.95 $296,934.63 $17,792.88 $3,065.37
2024 August $1,896.21 $287.81 $1,608.40 $296,646.82 $19,401.27 $3,353.18

Here’s what your amortization schedule would look like in the final year:

Sample Amortization Schedule for Final Year
Year Month Payment Principal Interest Balance Total Interest Total Principal
2052 September $1,896.20 $1,777.18 $119.02 $20,195.97 $381,971.19 $279,804.03
2052 October $1,896.20 $1,786.81 $109.39 $18,409.16 $382,080.58 $281,590.84
2052 November $1,896.21 $1,796.49 $99.72 $16,612.67 $382,180.30 $283,387.33
2052 December $1,896.21 $1,806.22 $89.99 $14,806.45 $382,270.28 $285,193.55
2053 January $1,896.20 $1,816.00 $80.20 $12,990.45 $382,350.49 $287,009.55
2053 February $1,896.20 $1,825.84 $70.36 $11,164.61 $382,420.85 $288,835.39
2053 March $1,896.20 $1,835.73 $60.47 $9,328.88 $382,481.33 $290,671.12
2053 April $1,896.20 $1,845.67 $50.53 $7,483.21 $382,531.86 $292,516.79
2053 May $1,896.20 $1,855.67 $40.53 $5,627.54 $382,572.39 $294,372.46
2053 June $1,896.20 $1,865.72 $30.48 $3,761.82 $382,602.87 $296,238.18
2053 July $1,896.21 $1,875.83 $20.38 $1,885.99 $382,623.25 $298,114.01
2053 August $1,896.21 $1,885.99 $10.22 $0.00 $382,633.47 $300,000.00

As shown in this amortization table for a mortgage, the amount of your payment that’s allocated to the principal increases as the mortgage moves toward maturity, while the amount applied to interest decreases.

Note that this is the case for a typical 30-year fixed-rate mortgage. Amortization schedules — and how the payment is distributed to the interest and principal — can vary based on factors like how much you’re borrowing and your down payment, the length of the loan term and other conditions. Using Bankrate’s calculator can help you see what the outcomes will be for different scenarios.

Why you should understand your mortgage amortization schedule

When deciding on a loan term and amortization, it’s important to consider how long you plan to remain in the home.

“Say, for example, you purchased a starter home intending to live in it for only five years before upgrading to a larger house,” Khanna says. “You expect to make a profit when you sell, but you find out that you owe more than the value of the house. That’s because of your chosen amortization schedule and a slight depreciation [in the] home’s value. In this scenario, you opted for a 30-year mortgage over a 15-year loan, and most of your payments went toward interest rather than the principal balance.”

Understanding your amortization schedule can also help you determine if you need to change your repayment strategy, especially if you’re struggling to make payments.

“For those who may be facing challenges paying their mortgage each month, you can, for instance, discuss options with your lender that include refinancing your mortgage or only paying a portion of the debt owed each month,” says David Druey, Florida regional president of Miami-based Centennial Bank.

You might also be considering prepaying your mortgage, such as making biweekly payments instead of paying once a month. Knowing how your loan amortizes can help inform your strategy here, too.

How mortgage amortization acceleration works

If you can afford to make extra payments on your mortgage, you’ll lower your principal balance and reduce the amount of interest you pay on your loan.

For example, let’s say you have a $200,000, 30-year loan with a 6.5 percent interest rate. By making an extra $100 payment each month, you would save $55,944 in interest over the life of your mortgage. You’d also pay off your loan five years and seven months earlier than if you didn’t make the extra payment.

How do you calculate mortgage amortization?

It’s best to use a loan amortization calculator to understand how your payments break down over the life of your mortgage. To use the calculator, you’ll need to input a few details about your mortgage, including:

  • Principal loan amount
  • Loan term (such as 30 years)
  • Loan start date
  • Interest rate
  • How often you make extra payments
  • Amount of extra payments

The calculator will provide an in-depth schedule for each month of your loan with details such as how much principal and interest you’ll pay in any given payment and how much principal and interest will have been paid by a specific date.

Mortgage amortization FAQs

  • You might find your mortgage amortization schedule by logging into your lender’s portal or website and accessing your loan information online. But in some cases, you may have to contact your lender to request it.

    “Borrowers typically need to call their bank or lender to request their amortization schedule for an existing mortgage loan,” says Druey.
  • If you have a fixed-rate mortgage, changing interest rates in the broader market won’t have an impact on your amortization, since you’re locked into your rate over a set term. If you were to refinance that fixed-rate loan to a different term, say 15 years instead of 30, your new loan would amortize differently over the shorter period.

    If you have an adjustable-rate mortgage and your rate moves up or down, the interest payments on your amortization schedule will change to reflect that.
  • Negative amortization happens when the payments you’re making don’t cover the interest on the loan. This might be the case if your lender allows you to pay only some of the interest initially, for example. This means your balance grows instead of being paid down. Over time, if the amount you owe ends up exceeding the value of your home, you’ll be “underwater” on the property, making it more difficult to sell and use those proceeds to repay the mortgage.