Finance
How an Amortization Schedule Works, Row by Row
What each column of an amortization schedule means, a complete 12-month schedule, a 30-year mortgage at 6.5% in selected rows, and what extra payments and a shorter term change.
By TooleemPublished Facts checked
Short answer
An amortization schedule lists every payment on a loan and splits it into interest (the monthly rate times the balance still owed) and principal (the rest of the payment, which lowers the balance). The payment stays the same, but the split moves: on a $300,000 mortgage at 6.5% for 30 years, the first $1,896.20 payment is $1,625.00 interest and only $271.20 principal, and principal overtakes interest only in payment 233, almost 20 years in. That is why extra payments early in a loan save the most interest.
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On this page
What each column means
| Column | How it is worked out |
|---|---|
| Payment number | 1 to the number of months (360 for 30 years) |
| Opening balance | What you still owe before this payment |
| Payment | Fixed: P × r ÷ (1 − (1 + r)^−n) |
| Interest | Opening balance × monthly rate (annual rate ÷ 12) |
| Principal | Payment − interest |
| Closing balance | Opening balance − principal; it becomes next month’s opening balance |
Monthly payment
payment = P × r ÷ (1 − (1 + r)^−n)
P is the amount borrowed, r the monthly rate as a decimal and n the number of payments. Taxes and insurance that a lender collects with a mortgage payment are not part of this schedule.
A complete schedule, row by row
Swipe sideways to see every column.
| No. | Opening balance | Payment | Interest | Principal | Closing balance |
|---|---|---|---|---|---|
| 1 | $10,000.00 | $865.27 | $58.33 | $806.94 | $9,193.06 |
| 2 | $9,193.06 | $865.27 | $53.63 | $811.64 | $8,381.42 |
| 3 | $8,381.42 | $865.27 | $48.89 | $816.38 | $7,565.04 |
| 4 | $7,565.04 | $865.27 | $44.13 | $821.14 | $6,743.90 |
| 5 | $6,743.90 | $865.27 | $39.34 | $825.93 | $5,917.97 |
| 6 | $5,917.97 | $865.27 | $34.52 | $830.75 | $5,087.22 |
| 7 | $5,087.22 | $865.27 | $29.68 | $835.59 | $4,251.63 |
| 8 | $4,251.63 | $865.27 | $24.80 | $840.47 | $3,411.16 |
| 9 | $3,411.16 | $865.27 | $19.90 | $845.37 | $2,565.79 |
| 10 | $2,565.79 | $865.27 | $14.97 | $850.30 | $1,715.49 |
| 11 | $1,715.49 | $865.27 | $10.01 | $855.26 | $860.23 |
| 12 | $860.23 | $865.25 | $5.02 | $860.23 | $0.00 |
Worked example
Reading row 1
interest = $10,000.00 × 0.07 ÷ 12 = $58.33
principal = $865.27 − $58.33 = $806.94
closing balance = $10,000.00 − $806.94 = $9,193.06
A 30-year mortgage: the same pattern, stretched
Swipe sideways to see every column.
| Payment | Year | Interest | Principal | Balance after |
|---|---|---|---|---|
| 1 | 1 | $1,625.00 | $271.20 | $299,728.80 |
| 12 | 1 | $1,608.40 | $287.80 | $296,646.88 |
| 60 | 5 | $1,523.20 | $373.00 | $280,833.26 |
| 120 | 10 | $1,380.41 | $515.79 | $254,329.14 |
| 180 | 15 | $1,182.96 | $713.24 | $217,678.77 |
| 240 | 20 | $909.91 | $986.29 | $166,997.98 |
| 300 | 25 | $532.35 | $1,363.85 | $96,915.68 |
| 360 | 30 | $10.24 | $1,890.67 | $0.00 |
- After 10 years of payments you still owe 85% of the loan ($254,329 of $300,000).
- Principal becomes the larger part of the payment only from payment 233 (year 20).
- Half the loan is repaid only after payment 257, about 21 years and 5 months in.
What changes the schedule
| Choice | Monthly payment | Months to repay | Total interest |
|---|---|---|---|
| 30 years, as agreed | $1,896.20 | 360 | $382,637 |
| 30 years plus $100 a month toward principal | $1,996.20 | 312 | about $321,640 |
| 15-year loan at the same rate | $2,613.32 | 180 | $170,398 |
An extra payment applied to principal shortens the loan, because every later interest charge is calculated on a smaller balance. Ask the lender to apply it to principal rather than to the next payment, and check that there is no prepayment penalty.
Common mistake
When the schedule is not this simple
Adjustable-rate loans recalculate the schedule when the rate resets. Interest-only periods have no principal at all. Some lenders compute interest daily, so a payment made a few days late shifts a little more of it to interest. Your lender’s schedule is the one that counts.
Do the calculation
Loan Calculator
Build the full schedule for your own loan amount, rate and term, and see the total interest before you sign.
Tools used in this guide
Sources
The figures and rules in this guide come from these documents.
- What is amortization and how could it affect my auto loan?Consumer Financial Protection BureauDefinition of amortization and of the amortization schedule; more interest early, more principal later.
- How does paying down a mortgage work?Consumer Financial Protection BureauHow each payment splits between principal and interest; taxes and insurance collected separately.
Facts checked
General information, not legal, tax or financial advice. Rules change; check the cited sources for your own case.