Faro Labs / Tools / Loan amortization calculator
Loan amortization calculator
See exactly how a loan is paid down, every year's principal, interest, and balance, and what an extra monthly payment does to your interest and payoff date.
Total interest $453,884 a total cost of $793,884 on $340,000 borrowed.
Year-by-year amortization
Principal and interest paid each year, and the balance remaining at year end: principal first exceeds interest around year 20.
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | $3,624 | $22,839 | $336,376 |
| 2 | $3,876 | $22,587 | $332,501 |
| 3 | $4,146 | $22,317 | $328,355 |
| 4 | $4,434 | $22,028 | $323,921 |
| 5 | $4,743 | $21,720 | $319,177 |
| 6 | $5,073 | $21,389 | $314,104 |
| 7 | $5,427 | $21,036 | $308,677 |
| 8 | $5,804 | $20,658 | $302,873 |
| 9 | $6,209 | $20,254 | $296,664 |
| 10 | $6,641 | $19,822 | $290,023 |
| 11 | $7,103 | $19,359 | $282,920 |
| 12 | $7,598 | $18,865 | $275,322 |
| 13 | $8,127 | $18,336 | $267,195 |
| 14 | $8,693 | $17,770 | $258,502 |
| 15 | $9,298 | $17,165 | $249,204 |
| 16 | $9,945 | $16,517 | $239,259 |
| 17 | $10,638 | $15,825 | $228,621 |
| 18 | $11,379 | $15,084 | $217,242 |
| 19 | $12,171 | $14,292 | $205,072 |
| 20 | $13,018 | $13,444 | $192,053 |
| 21 | $13,925 | $12,538 | $178,128 |
| 22 | $14,894 | $11,568 | $163,234 |
| 23 | $15,931 | $10,531 | $147,303 |
| 24 | $17,041 | $9,422 | $130,262 |
| 25 | $18,227 | $8,236 | $112,035 |
| 26 | $19,496 | $6,967 | $92,539 |
| 27 | $20,854 | $5,609 | $71,685 |
| 28 | $22,306 | $4,157 | $49,379 |
| 29 | $23,859 | $2,604 | $25,520 |
| 30 | $25,520 | $943 | $0 |
How amortization works
interest this month = current balance × (annual rate ÷ 12)
new balance = balance − principal reduction
An amortizing loan has one fixed payment, but the split between interest and principal changes with every payment. Interest is always charged on the balance you still owe, which is highest at the beginning, so early payments are mostly interest and barely reduce the balance. As the balance falls, the interest slice shrinks and the principal slice grows, accelerating toward the end.
Why extra principal is so powerful
An extra principal payment doesn't just reduce the balance by that amount: it erases all the future interest that dollar would have accrued over the remaining term. That's why a small, consistent extra payment early in the loan has an outsized effect: try it in the field above and watch the payoff date and total interest move.
Amortization questions
What is loan amortization?
Amortization is the process of paying a loan down to zero with equal payments over a fixed term. Each payment covers the interest due on the current balance first, and whatever is left reduces principal. Because the balance shrinks over time, the interest portion falls and the principal portion grows.
How much does paying extra principal save?
Often far more than people expect, because every extra dollar of principal removes all the future interest that dollar would have generated. On a typical 30-year mortgage, even a modest fixed extra payment can shorten the loan by several years and save tens of thousands in interest. The summary above computes it for your exact numbers.
Why is so much of my early payment interest?
Interest is charged on the outstanding balance, which is largest at the start of the loan. Only the amount left after interest reduces principal, so early payments barely move the balance. The schedule shows the exact year the principal portion overtakes the interest portion.
Does amortization apply to any loan?
It applies to any fully-amortizing, fixed-payment loan: mortgages, most auto loans, many personal loans. Interest-only and balloon loans amortize differently, and revolving credit like a credit card doesn't amortize on a fixed schedule at all.
Every calculator
Amortization is one line of a bigger picture.
Faro folds it into a full rental underwrite, cash flow, equity, and what to offer, from a pasted listing.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.