$250,000 at 7%
30-Year Total Interest$348,500
15-Year Total Interest$112,500
Savings$236,000
Calculate Your Monthly Payment
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Required if down < 20%
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Applied to principal each month
Total Monthly Payment
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Principal & Interest • Tax • Insurance • PMI • HOA
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Disclaimer: Results shown are estimates for educational purposes only and do not constitute financial, tax, legal, or investment advice. Actual payments vary based on lender, credit score, loan type, and local assessments. Consult a licensed mortgage professional for your specific situation.
What Is Amortization and Why Does It Matter?
Amortization is the process of paying off your mortgage through equal scheduled payments over the loan term. Each payment consists of two parts: principal (reducing your loan balance) and interest (the cost of borrowing). The split between the two shifts dramatically over time — and understanding this can save you thousands of dollars.
Why Early Payments Are Mostly Interest
In the early years of a 30-year mortgage, the vast majority of each payment goes toward interest. On a $300,000 loan at 7%, your first payment breaks down as approximately $1,748 in interest and only $63 in principal repayment. By month 120 (year 10), it shifts to roughly $1,620 in interest and $191 in principal. It is not until around month 252 (year 21) that principal exceeds interest in each payment.
Monthly Interest = Remaining Balance × (Annual Rate ÷ 12)
Monthly Principal = Monthly Payment − Monthly Interest
Monthly Principal = Monthly Payment − Monthly Interest
Sample Amortization: $300,000 at 7% for 30 Years
| Year | Annual Principal | Annual Interest | Remaining Balance |
|---|---|---|---|
| 1 | $855 | $20,943 | $299,145 |
| 5 | $1,098 | $20,700 | $293,904 |
| 10 | $1,555 | $20,243 | $284,977 |
| 15 | $2,204 | $19,594 | $272,036 |
| 20 | $3,123 | $18,675 | $252,878 |
| 25 | $4,427 | $17,371 | $223,837 |
| 30 | $7,752 | $14,046 | $0 |
The Power of Extra Principal Payments
Paying an extra $200/month on a $300,000 loan at 7% saves approximately $117,000 in total interest and pays off the loan about 7 years early. The earlier in the loan term you make extra payments, the greater the savings — because every dollar of extra principal paid today eliminates all the future interest that would have been calculated on that balance.
To see the impact of extra payments on your specific loan, enter your details in the calculator above and toggle the amortization schedule.
15-Year vs 30-Year: Total Interest Comparison
$400,000 at 7%
30-Year Total Interest$557,600
15-Year Total Interest$180,000
Savings$377,600
$600,000 at 7%
30-Year Total Interest$836,400
15-Year Total Interest$270,000
Savings$566,400
Amortization FAQ
Yes — your lender is required to provide an amortization schedule at closing. It will show every monthly payment broken into principal and interest for the full loan term. You can also generate one at any time using this calculator — enter your remaining balance, current rate, and remaining term to see your updated schedule.
Extra payments go entirely toward principal, which reduces your balance faster and therefore reduces future interest charges. Always specify that extra payments should be applied to principal. Some lenders apply extra payments to future scheduled payments (prepaid interest) rather than reducing principal — confirm with your servicer.
Making biweekly half-payments (26 payments/year instead of 12 monthly) results in one extra full payment per year. On a $300,000 loan at 7%, this saves approximately $102,424 in interest and pays off the loan about 6 years early. Some lenders offer official biweekly programs; others allow you to simply add 1/12 of your payment as extra principal each month for the same effect.