A mortgage amortization calculator and schedule helps borrowers determine how much their monthly loan payment will be. The amortization schedule shows both the principal and interest borrowers pay each month over the loan term. The calculator uses inputs like how much you paid for the property, your down payment and the length of the loan in months and years to help determine your monthly payment.
How to Read Your Mortgage Amortization Schedule Results
- Monthly payment: After entering your data, the calculator provides an amortization schedule that includes your anticipated monthly payment. This number is important in determining a loan’s affordability.
- Principal amount: The amortization schedule separates the principal portion of your monthly payment from interest, showing how much of your monthly payment gets applied to the total loan balance.
- Interest amount: The mortgage calculator also separates the fixed-rate interest payments from your principal payments so you can see how much monthly interest you pay. Over time, the interest portion of monthly payments decrease. Your total monthly mortgage payment stays the same, however.
- Total interest paid: You can see in the amortization table how much the loan costs each month as well as total costs over the life of the loan. The last row in this column shows the total amount of interest you will have paid, in addition to principal for the loan term.
- Loan principal balance: As you make monthly mortgage payments, the portion paid to the principal gets deducted from the amount originally borrowed. The mortgage amortization schedule shows the decrease in the amount you owe each month until it is paid off.
- Next steps: Once you have reviewed the results of the mortgage calculator with amortization schedule, you can decide if it meets your needs for the type of financing you are seeking and the type of property you want to purchase.
How the Mortgage Amortization Calculator Works
A mortgage calculator with amortization schedule allows borrowers to determine what their monthly principal and interest payments will be for a real estate loan. The amortization schedule lists each monthly payment, broken down by principal and interest, over the term of the loan. It also shows the total amount of principal and interest paid over the life of the loan, using a fixed interest rate.
Loan terms vary depending on the type of loan, and can range from 12 months for a short-term hard money loan to 40 years for a mortgage on a primary residence. At the beginning of paying back a mortgage loan, the majority of the payment goes towards interest. Over time, more of the payment is applied to the principal balance.
This is because interest is calculated on the most recent ending balance of the loan. As the loan balance decreases with consistent payments, interest payments also decrease. Our mortgage calculator and amortization table are useful for borrowers to calculate the cost of the debt. It’s especially helpful for real estate investors when projecting the financial performance of rental property.
Mortgage Amortization Calculator Inputs
There are seven pieces of information you’ll need to use the mortgage amortization calculator. These include the purchase price, down payment, loan term, current mortgage interest rate, property taxes, and the homeowner’s insurance premium.
The inputs for the mortgage amortization calculator include:
Property Sale Price
In this field, enter the amount you intend to purchase the property for. The purchase price can potentially be less than the property’s market value. If the purchase price is greater than the current market value, you may have to come up with the difference in cash since lenders don’t finance over 100%, and few finance more than 96.5%.
Enter the percentage of the sales price you plan to put as a down payment on the property. The required amount can vary depending on the type of loan. Down payments for primary residence loans can be as low as 3%, while investment property loans generally require 30% or more down. For mortgages with less than a 20% down payment, expect to pay private mortgage insurance (PMI).
Loan Term Years
The loan term varies by lender and loan type, and can range from a few years for a fix-and-flip loan to 30 years for conventional financing. Even if you plan to pay the loan off early, use the full loan term based on the lender’s terms. You can then reuse the calculator to compare how much interest you’ll save if you pay off the loan early. Check if the loan carries a prepayment penalty for early payoff.
Loan Term Months
The loan calculator also includes the number of months of the loan. For example, a 30-year loan is 360 months. Short-term loans, such as bridge loans, can be as few as three to six months long. Our mortgage amortization calculator provides the option of viewing the loan and amortization schedule on a monthly basis.
In this field, enter your anticipated interest rate. You can find interest rates by contacting the lenders you’re considering. Some lenders offer interest rates on their websites. Before entering information, explore the type of mortgage you are applying for. Our calculator is based on loans with a fixed interest rate. If you are considering an adjustable or variable interest rate loan, you can use our ARM calculator.
You’ll want to know the cost of the annual property taxes so you can get an accurate picture of the property’s monthly expenses in addition to principal and interest payments. You can find property tax information through local county tax assessor databases or on property tax cards, or you can look at the property listing on sites like Zillow, Realtor.com, and Trulia.
Many buyers have their property taxes and insurance payments escrowed and wrapped into their monthly mortgage payment so they can make just one monthly payment instead of three. The national average for homeowner’s insurance on owner-occupied properties is $1,083. Rental property insurance is typically 20% to 30% higher for investment properties, depending on where the property is located. Call insurance companies for a quote.
Mortgage Amortization Schedule Outputs
After entering your data, the mortgage calculator will provide summary information on your loan payment amount, the starting and ending dates of the loan, and the total loan cost. You’ll have the option of expanding the full amortization table.
The expanded table displays the fixed monthly payment amount and how much is applied to principal and interest. The final two columns show the total amount of monthly interest paid and the monthly mortgage balance until it is paid off.
The outputs for the mortgage amortization calculator are:
Loan Starting Date & Estimated Payoff Date
The starting and estimated payoff dates are based on the first day of the next month. For example, if today is February 19, 2020, the starting date is March 1, 2020. The estimated payoff date is the date of the last payment in the loan term you entered into the calculator. If you entered 30 years (360 months), the payoff date from December 1, 2019, would be November 30, 2049.
Monthly Payment Date
The amortization schedule breaks each payment down month by month over the term of the loan, organizing the mortgage payment activity for each month. Using our previous example, the table would give an accounting of the monthly payments, principal, interest, total interest, and loan balance from December 01, 2019, through November 30, 2049.
Monthly Payment Amount
The monthly payment amount is calculated by a complicated formula that includes the principal loan amount, monthly interest rate, and number of payments over the life of the loan. We’ve simplified this process for you with our calculator. If you’d like to manually calculate your monthly payment, the formula is below.
Where M is the monthly payment
P is the beginning principal loan amount
r is the interest rate
n is the number of loan payments over the life of the loan
Payment Applied to Principal
Our calculator automatically separates principal and interest payments and amortizes them across the loan term. Your monthly principal payment is smaller at the beginning of the loan, with the larger portion going to interest payments. As the loan is paid, the amount applied to principal increases while interest payments decrease. This is important to consider if you plan to refinance, since you could start paying more in interest payments with a new loan.
Payment Applied to Interest
The monthly interest payments are separated from the monthly principal payments. Interest payments are higher at the beginning of loan repayment and decline over the life of the loan. As the loan balance declines, interest gets charged on a smaller amount of money each month, reducing the amount applied to interest and increasing principal payments. The monthly mortgage payment remains the same.
If you’re buying a primary residence, you can deduct the interest payments on the first $750,000 of your mortgage when you file your taxes each year. If you want to take a tax deduction on rental property, you can deduct the mortgage interest as part of the property’s expenses you annually report on your Schedule E.
Total Monthly Interest Paid to Date
The total monthly interest paid-to-date column in the amortization schedule helps you keep track of how much the mortgage debt is costing you both monthly and over the loan term. For example, if you borrow $300,000 at 5.25% interest over 30 years, the total amount of interest paid is $296,380. Investment property mortgage rates are typically higher.
Remaining Mortgage Balance
The mortgage balance column gives a month-by-month breakdown of the remaining principal balance of the loan. This figure subtracts principal payments and does not include interest. If you scroll through the months, you can see that as interest payments decline with more of your monthly payment applied to principal, the decrease in the remaining mortgage balance begins to accelerate.
When to Use the Mortgage Amortization Calculator
The mortgage calculator with amortization schedule can be used by homebuyers and real estate investors to determine monthly principal, fixed interest payments, and the total cost of the loan over its lifetime. It can also be used for any loan that is fully amortized, such as a car loan, if you leave out the taxes and insurance. Simply enter the aforementioned inputs into the calculator, and the calculator will provide a monthly amortization schedule with the information.
Homebuyers can use the calculator to figure out how much buying a new home will cost, including the costs for property taxes and homeowner’s insurance. Investors can use the calculator for conventional financing on rental properties as they begin to build their real estate portfolio. As the investment portfolio grows, investors will need more complex calculators and tools.
What’s Not Included in the Mortgage Amortization Calculator
The amortization calculator is great for doing simple evaluations of conventional fixed-rate loans. It doesn’t calculate adjustable rate mortgages (ARM) or rental property income, which some lenders use to calculate a rental property loan.
The amortization schedule also does not calculate rental property depreciation, which is useful for buy-and-hold investors who use depreciation to offset expenses while maximizing profits. Knowing how to calculate depreciation can help investors determine the property’s useful life and help them in planning and scheduling renovations.
Pros & Cons of the Mortgage Amortization Calculator
Our mortgage calculator with amortization schedule will help you determine your monthly principal and interest payments, as well as how much your fixed-rate loan will cost over its lifetime. It provides basic mortgage payment information. However, if you’re not applying for a conventional type of loan, the mortgage amortization schedule may not be terribly helpful.
Pros of Mortgage Amortization Calculator
The pros of the mortgage amortization calculator include:
- Shows the total cost of the mortgage debt: Having a monthly accounting of how much interest is paid as well as the total interest paid over the life of the loan helps borrowers decide how much they want to spend and how long they want to take to pay off the mortgage.
- Monthly principal and interest can help determine affordability: The mortgage calculator shows what the monthly payments will be based on the interest rate, loan term, and down payment. This is useful for borrowers to determine what they can spend each month on housing.
- The tax deductibility of mortgage interest: The calculator and table help you figure out your tax deduction for interest expense.
- Shows your ongoing loan balance: The mortgage calculator with amortization table shows you how much money you owe on your loan at any point in time during the repayment term.
- Encourages budgeting: Homebuyers and investors benefit from having a budget. Seeing how much principal, interest, taxes, and insurance will cost can help borrowers plan and budget for these expenses.
Cons of Mortgage Amortization Calculator
The cons of the mortgage amortization calculator include:
- Doesn’t consider alternative types of financing: The calculator and amortization schedule provides basic mortgage calculations and doesn’t factor in other expenses and ratios that are used for alternative types of financing.
- Doesn’t consider prepayment penalties: Some investment property loans carry prepayment penalties that borrowers want to consider when paying off a loan early or refinancing. The mortgage calculator assumes the borrower will pay the loan for the term they enter into the calculator.
- Best for residential property loans: Financing a commercial or mixed-use property is more complex than buying a primary residence or small residential investment property. The mortgage calculator is designed for fixed-rate loans with conventional financing.
Alternatives to Using the Mortgage Amortization Calculator
Our mortgage calculator with amortization schedule is for fixed-rate loans with a term from 30 days to 30 or more years. It’s typically used to evaluate how much a single loan will cost borrowers over the life of the loan.
Alternatives to the mortgage amortization calculator include:
- Hard money loan calculator: Our hard money loan calculator is ideal for rehab and fix-and-flip loans. It includes the after repair value (ARV), estimate of repair costs, and the loan-to-value (LTV) most hard money lenders require.
- House-flipping calculator: Use our house flipping calculator to evaluate the property acquisition and marketing costs, and calculate your return on investment (ROI) when you flip a house.
- Balloon mortgage calculator: The balloon payment calculator uses an amortization schedule and balloon payment formula to calculate the monthly payment on a balloon mortgage. It also shows how much the final balloon payment is at the end of the loan.
Our mortgage calculator with amortization schedule can help you plan for your primary residence or investment property expenses, showing how much you’ll pay in principal, interest, taxes, and insurance over the life of the loan. The amortization schedule is particularly useful for investors in determining the financial feasibility of a rental property.
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