How a fixed-rate loan payment is calculated
For a standard amortizing loan, the payment stays the same every month, but the split between interest and principal changes. At the start most of each payment is interest, because interest is charged on the full balance. As the balance falls, a larger share of each payment reduces the principal. The monthly payment is found with the standard formula P × r ÷ (1 − (1 + r)−n), where P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12) and n is the number of monthly payments. For example, borrowing 200,000 at 6% for 30 years gives a payment of about 1,199.10 and roughly 231,676 in total interest over the life of the loan.
Reading the results
- Monthly payment: the amount due each month for principal and interest.
- Total interest: the cost of borrowing over the full term. Comparing it between different terms shows how much a longer loan really costs.
- Total repaid: the amount borrowed plus all the interest.
- Yearly table: for each year, how much of your payments went to interest and to principal, and the balance remaining at the end of the year.
The effect of loan term and rate
A longer term lowers the monthly payment but increases the total interest, because the balance stays higher for longer. A shorter term raises the payment but saves interest. The rate has a large effect too: on long loans, even a small difference in the rate adds up to a large difference in cost, so it is worth trying a few values here before agreeing to a loan.
Extra payments
Enter an extra amount to see what happens if you pay more than the required payment each month and the extra goes straight to the principal. Because interest is charged on a smaller balance afterwards, the loan is paid off sooner and total interest falls. The result shows how many months sooner the loan ends and how much interest you save, and the yearly table switches to the faster schedule. Check with your lender first, because some loans have prepayment penalties or require you to specify that extra money should be applied to principal.
What this calculator does not include
It covers principal and interest on a fixed-rate loan. It does not include property tax, insurance, mortgage insurance, origination or other fees, or the effect of variable rates, so a mortgage payment on a real statement will usually be higher. The lender's own schedule may also differ by small amounts, because lenders round each payment to the cent and may calculate interest by days rather than by months. The calculator is meant for planning and comparison, not as a loan offer or financial advice. For a binding figure, ask your lender for an official disclosure. All calculations happen in your browser and nothing you enter is sent or stored.