How loan amortization works
Every fixed-rate loan follows the same mathematical pattern: your monthly payment stays the same throughout the term, but the split between principal and interest shifts dramatically over time. In month one of a 30-year mortgage, most of your payment goes to interest. By month 360, nearly all of it reduces your balance.
The calculation behind this is the standard amortization formula: your payment is set to a level that exactly exhausts the principal over n months at your interest rate. Each period, interest is charged on the remaining balance; everything left over chips away at what you owe.
The calculator runs this month-by-month loop for your full loan term and reports the results. Every number — monthly payment, total interest, payoff date — comes directly from this iteration, not from rounding shortcuts.
The real power of extra payments
Because interest is always calculated on the remaining balance, paying extra principal today saves you compounding interest on all future periods. A $200 extra payment in month one doesn’t save you $200 — it saves you $200 plus all the interest that $200 would have generated for the rest of the loan.
On a $400,000, 30-year loan at 6.5%, adding $300 per month cuts the total interest bill by over $100,000 and shortens the loan by roughly 7 years. The payoff is non-linear: the same $300 added to a 15-year loan at the same rate saves far less because there are fewer periods for compounding to work against you.
Use the Payoff Accelerator mode to see your exact savings from any extra monthly amount or lump-sum payment. The schedule updates live as you adjust.
When to refinance — and when not to
Refinancing replaces your current loan with a new one, typically at a lower rate or different term. The financial question is whether your interest savings over the remaining life of the loan outweigh the closing costs you pay upfront (usually 2–5% of the loan balance).
The breakeven point is the month when cumulative interest savings equal your closing costs. If you plan to stay in the home or hold the loan past that date, refinancing puts money in your pocket. If you expect to sell or pay off before breakeven, it costs you money.
A rate drop of 1% or more on a balance above $200,000 almost always breaks even within 2–3 years. A 0.25% drop may take 6–8 years to break even after costs. Use the Refinance Comparison mode to find your exact number.
15-year vs 30-year: the full picture
The 30-year mortgage wins on monthly cash flow; the 15-year wins on total cost and speed of equity building. The 15-year rate is typically 0.5–0.75% lower than the 30-year rate, which compounds the advantage further.
The right choice depends on what you’d do with the payment difference. If you invest the $500–$700 monthly saving from a 30-year into an index fund at historical market returns, you may come out ahead of the 15-year forced savings — especially in a low-rate environment. If the extra cash would be spent rather than invested, the 15-year’s discipline wins.
Use the 15 vs 30 Year Compare mode to see both scenarios side by side with your actual numbers, not hypothetical ones.
More housing calculators
Coming soon: mortgage payment calculator, auto loan calculator, and loan payoff tracker — all built on the same engine with their own pre-filled defaults.
- Savings Goal Calculator → Save for a down payment — find your monthly number and timeline.
- Compound Interest Calculator → Model how your down payment savings grow with interest.
Frequently asked questions
What is an amortization schedule?
An amortization schedule is a complete table of all loan payments from the first month through the last, showing how each payment splits between principal and interest. Early payments are heavily weighted toward interest; later payments go mostly to principal. The calculator above generates the full schedule and lets you download it as a CSV.
How do I calculate my monthly mortgage payment?
The standard formula is: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan principal, r is the monthly rate (annual rate ÷ 12), and n is the number of monthly payments (term in years × 12). Enter your loan amount, interest rate, and term in the calculator above and it computes the payment instantly.
How much do extra payments save on a mortgage?
Even a modest extra payment reduces the principal faster, which lowers the balance on which future interest is charged. On a $300,000, 30-year loan at 6%, adding $200 per month cuts about 6 years 9 months (81 months) off the term and saves $91,173 in total interest — reducing the loan from $347,515 to $256,341 in interest. Use the "Payoff Accelerator" mode above to see the exact savings for your loan.
Should I refinance my mortgage?
Refinancing makes financial sense when your interest savings exceed the closing costs before you move or pay off the loan. The breakeven point is closing costs ÷ monthly savings. If you plan to stay in the home past that date, refinancing likely pays off. Switch to "Refinance Comparison" mode in the calculator to see your breakeven for any rate/term combination.
What is the difference between a 15-year and 30-year mortgage?
A 15-year mortgage has a higher monthly payment — roughly 45% more than a 30-year on the same balance — but you pay dramatically less total interest and build equity much faster. On a $300,000 loan at 6%, a 30-year costs about $347,000 in interest; a 15-year at 5.5% costs about $142,000. Use the "15 vs 30 Year" compare mode to run these numbers for your situation.