How to read a mortgage amortization schedule
An amortization schedule lists every payment on your loan and shows how much goes to interest and how much actually reduces what you owe. Reading one explains why your balance barely moves in the early years — and why extra payments made early are so powerful.
What each column means
A schedule has one row per payment (or per year, in a summary) with these columns:
- Payment: your principal and interest payment, which stays the same on a fixed-rate loan.
- Interest: the lender's charge for that month, calculated on the balance you still owe.
- Principal: the rest of the payment, which reduces your balance.
- Remaining balance: what you owe after that payment.
Property taxes, homeowners insurance and PMI are usually collected in the same monthly bill, but they aren't part of the amortization schedule; they go to your escrow account.
The math behind it
The fixed payment comes from the standard amortization formula:
Payment = L · r / (1 − (1 + r)⁻ⁿ)
where L is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of payments. Each month, then:
- Interest = remaining balance × monthly rate.
- Principal = payment − interest.
- The balance drops by the principal, so next month's interest is slightly smaller and next month's principal slightly larger.
Month-by-month example
A $320,000 loan at 6.75% for 30 years (360 payments). The monthly rate is 6.75% ÷ 12 = 0.5625%, and the payment is $2,075.51.
| Payment # | Payment | Interest | Principal | Remaining balance |
|---|---|---|---|---|
| 1 | $2,075.51 | $1,800.00 | $275.51 | $319,724.49 |
| 2 | $2,075.51 | $1,798.45 | $277.06 | $319,447.42 |
| 3 | $2,075.51 | $1,796.89 | $278.62 | $319,168.80 |
| … | ||||
| 12 | $2,075.51 | $1,782.46 | $293.05 | $316,589.61 |
| … | ||||
| 360 | $2,075.51 | $11.61 | $2,063.90 | $0.00 |
In the first month, $1,800 of the $2,075.51 payment — about 87% — is interest ($320,000 × 0.5625%). By the last payment, interest is under $12.
The same loan, year by year
| Year | Interest paid that year | Principal paid that year | Balance at year end |
|---|---|---|---|
| 1 | $21,496 | $3,410 | $316,590 |
| 5 | $20,442 | $4,464 | $300,402 |
| 10 | $18,656 | $6,250 | $272,963 |
| 15 | $16,155 | $8,751 | $234,545 |
| 20 | $12,654 | $12,253 | $180,756 |
| 25 | $7,751 | $17,155 | $105,445 |
| 30 | $887 | $24,019 | $0 |
What the table shows:
- Principal doesn't overtake interest until payment 238 — almost 20 years into the loan.
- After 10 years of payments (about $249,000 paid), the balance has dropped by only about $47,000. Nearly half of all the interest on the loan — 47% — is paid in those first 10 years.
- You don't owe less than half the original amount until payment 259, about 21.6 years in.
The higher the rate, the more lopsided this gets. On a lower-rate loan, principal overtakes interest much earlier.
What this means for you
- Extra payments are most powerful early. Every extra dollar of principal in year 2 removes interest that would have accrued for decades. See the numbers in the extra payment calculator.
- Selling early means little equity from payments. If you sell after five years, most of your equity will come from your down payment and any price appreciation, not from the loan being paid down.
- Refinancing restarts the clock. A new 30-year loan puts you back at the interest-heavy start of a schedule — worth weighing in any refinance decision.
- A shorter term flips the balance. On a 15-year loan, a much larger share of each payment goes to principal from day one.
Recasting: lowering the payment after a lump sum
If you pay a large lump sum toward principal, your regular payment normally stays the same and the loan simply ends sooner. Some servicers offer a recast: for a modest fee, they recalculate your payment on the new, lower balance over the remaining term. It's the amortization formula applied again — useful if you want a lower required payment rather than an earlier payoff date.
How to get your own schedule
- Your loan servicer can provide one, and many show it in their online portal.
- Our mortgage calculator generates a year-by-year schedule for any loan and lets you download it as a CSV file for Excel or Google Sheets.
Generate your schedule. Enter your loan and download the full year-by-year amortization schedule.
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