What is an amortization schedule?
An amortization schedule is a table that details each periodic payment on a fixed-rate mortgage, showing the split between interest and principal, the remaining balance, and other payment details. It lays out the full repayment plan for your loan, from the first payment to the final one.
For a fixed-rate mortgage, the monthly payment remains constant, but the proportions allocated to interest and principal change over time. Early payments are mostly interest, and later payments are mostly principal. This happens because interest is calculated on the remaining balance, which decreases as you pay down principal.
Sources: Consumer Financial Protection Bureau, Amortization-Calc.com, HSH Associates, Financial Publishers
Key components: payment number, payment amount, interest, principal, balance
Each row in an amortization schedule typically includes: the payment number (which month it is), the payment amount (usually fixed for a fixed-rate mortgage), the interest portion, the principal portion, and the remaining balance after that payment.
The interest portion is calculated by multiplying the outstanding loan balance by the monthly interest rate (the annual rate divided by 12). The principal portion is the total monthly payment minus the interest portion. The remaining balance is the previous balance minus the principal portion paid.
- Payment number: identifies the sequence of the payment.
- Payment amount: the fixed monthly payment for a fixed-rate mortgage.
- Interest portion: the part of the payment that goes toward interest on the current balance.
- Principal portion: the part of the payment that reduces the loan balance.
- Remaining balance: what you still owe after the payment is applied.
Sources: Investopedia, Amortization-Calc.com, TransUnion
How to calculate monthly interest and principal portions
The standard amortization formula for calculating the fixed monthly payment is M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments. For a 30-year loan with monthly payments, n is 360.
Once you have the monthly payment, you can calculate the interest portion for each month: multiply the current balance by the monthly interest rate. The principal portion is simply the monthly payment minus that interest portion. Subtract the principal portion from the current balance to get the new balance for the next row.
- Monthly interest rate = annual interest rate ÷ 12.
- Interest portion = current balance × monthly interest rate.
- Principal portion = monthly payment − interest portion.
- New balance = current balance − principal portion.
Sources: Investopedia, Amortization-Calc.com, TransUnion
How to build an amortization schedule step-by-step
You can build an amortization schedule for a fixed-term, fixed-rate mortgage by using the loan term, interest rate, and loan amount. Follow these steps to create your own table, either in a spreadsheet or by hand.
Start with the loan details: the principal amount, the annual interest rate, and the total number of payments. Calculate the monthly payment using the formula above. Then, for each payment period, compute the interest portion, the principal portion, and the new balance, repeating until the balance reaches zero.
- Determine the loan's principal amount, annual interest rate, and term in years.
- Convert the annual interest rate to a monthly rate by dividing by 12.
- Calculate the total number of payments (term in years × 12).
- Use the amortization formula to find the fixed monthly payment.
- For the first row, calculate the interest portion by multiplying the starting balance by the monthly rate.
- Subtract the interest portion from the monthly payment to get the principal portion.
- Subtract the principal portion from the starting balance to get the new balance.
- Repeat steps 5-7 for each subsequent month, using the new balance each time.
- Continue until the balance reaches zero or close to it (the final payment may be slightly adjusted for rounding).
Sources: Investopedia, Amortization-Calc.com, HSH Associates, Financial Publishers
Sample schedule for a $300,000, 30-year mortgage at 6%
The table below shows the first five payments and the final payment, illustrating how the interest and principal portions change over time.
The exact schedule may vary slightly depending on rounding conventions, but this example demonstrates the general pattern. For your own loan, you can use a reliable amortization calculator or ask your lender for the official schedule.
| Payment # | Payment Amount | Interest | Principal | Balance |
|---|---|---|---|---|
| 1 | $1,798.65 | $1,500.00 | $298.65 | $299,701.35 |
| 2 | $1,798.65 | $1,498.51 | $300.14 | $299,401.21 |
| 3 | $1,798.65 | $1,497.01 | $301.64 | $299,099.57 |
| 4 | $1,798.65 | $1,495.50 | $303.15 | $298,796.42 |
| 5 | $1,798.65 | $1,493.98 | $304.67 | $298,491.75 |
| 360 | $1,798.65 | $8.94 | $1,789.71 | $0.00 |
Sources: Investopedia, Amortization-Calc.com, Calculator.net
How to use the schedule for financial planning
An amortization schedule is a powerful planning tool. It shows you exactly how much of each payment goes toward interest versus principal, helping you understand the true cost of your mortgage over time.
One key use is planning around private mortgage insurance (PMI). For many loans, PMI is required until the loan balance reaches 80% of the original property value, according to the initial amortization schedule. Your schedule can help you see when you might reach that milestone and potentially request PMI removal.
Another use is planning extra payments. Any extra payment applied directly to principal can reduce the total interest paid and shorten the loan term. You can model different prepayment scenarios to see how they affect your balance and payoff date.
Sources: Consumer Financial Protection Bureau, Amortization-Calc.com, TransUnion, JPMorgan Chase Bank, N.A.
Fixed-rate vs. adjustable-rate mortgages: schedule comparison
The type of mortgage you have affects whether an amortization schedule stays valid over the life of the loan.
For a fixed-rate mortgage, the payment remains constant, and the schedule is valid for the entire term. In contrast, for an adjustable-rate mortgage (ARM), the schedule is only valid until the next interest rate reset, because changes in the rate can change both the payment amount and the principal/interest split.
| Mortgage type | Payment stability | Schedule validity |
|---|---|---|
| Fixed-rate mortgage | Constant monthly payment | Valid for entire term |
| Adjustable-rate mortgage (ARM) | Payment changes at rate resets | Schedule only valid until next reset |
Sources: Consumer Financial Protection Bureau, Amortization-Calc.com, HSH Associates, Financial Publishers
Frequently asked questions
How is the interest portion of a mortgage payment calculated?
The interest portion is calculated by multiplying the outstanding loan balance by the monthly interest rate, which is the annual rate divided by 12. For example, on a $250,000 loan at 6.5% annual interest, the monthly interest rate is 0.0054167, and the first month's interest is $1,354.17 (250,000 × 0.0054167). (Sources:,, )
Sources: Investopedia, Amortization-Calc.com, TransUnionWhy does the principal portion increase over time?
The principal portion increases because the interest portion decreases as the loan balance is paid down. Since the total monthly payment stays the same for a fixed-rate mortgage, a smaller interest portion means a larger principal portion goes toward reducing the balance. (Sources:,, )
Sources: Consumer Financial Protection Bureau, Amortization-Calc.com, HSH Associates, Financial PublishersHow do extra payments change the amortization schedule?
Extra payments applied directly to principal reduce the outstanding balance faster, which lowers the interest due on subsequent payments. This can reduce the total interest paid over the life of the loan and shorten the loan term. (Sources:,, )
Sources: Amortization-Calc.com, TransUnion, JPMorgan Chase Bank, N.A.What is the difference between amortization schedule and amortization table?
There is no practical difference. The terms are used interchangeably to describe the table that details each periodic payment, showing the interest and principal portions and the remaining balance. (Sources:, )
Sources: Amortization-Calc.com, HSH Associates, Financial PublishersCan I create an amortization schedule for an adjustable-rate mortgage?
You can create a schedule, but it will only be valid until the next interest rate reset. Because the rate changes, both the payment amount and the principal/interest split can change after that point, requiring a new schedule. (Sources:, )
Sources: Amortization-Calc.com, HSH Associates, Financial PublishersSources
- CFPB Supervision and Examination Manual, Version 2 — Consumer Financial Protection Bureau
- Amortization Schedule: Definition, Formula, and Calculation — Investopedia
- Amortization Calculator – Free Amortization Schedule — Amortization-Calc.com
- Amortization Calculator — TransUnion
- Amortization Calculator — Calculator.net
- Mortgage Amortization Calculator — JPMorgan Chase Bank, N.A.
- Amortization Calculator - Payment Schedule — HSH Associates, Financial Publishers