Reading an amortization schedule
The Amortization Calculator returns three summary lines and a table with four columns — Year, Principal, Interest and Balance — and the Mortgage Payoff Calculator runs the same schedule twice, with and without a fixed extra payment. This guide explains what each row records, why interest dominates early, when the two columns change places, and what an extra payment does to the rows. It is part of the guides collection; How Amortization Works introduces the idea, the monthly payment formula guide derives the fixed payment the schedule is built from, and the methodology page states the conventions both rest on.
Every figure below is computed when this page is built, from inputs invented for the example. The payments, year rows, totals and payoff comparisons are the engine's own output — the same engine that runs in your browser. The engine reports its schedule by year; the only single-month figure on this page is month one's, derived in the one step the methodology page performs for its reference loan — the loan times the annual rate ÷ 12, and the rest of the payment to principal. None is a market figure. If the prose and the engine ever disagreed, the site would fail to build.
What one month of the schedule records
The methodology page states the rule: "A fixed monthly payment covers the interest accrued on the balance that month, and the remainder reduces the principal; the schedule is computed one month at a time so extra payments and payoff dates are exact." In the engine that is three operations per month: the month's interest is the opening balance times the annual rate divided by twelve, the principal portion is the fixed payment minus that interest, and the new balance is the old balance minus the principal portion. The payment itself is the standard amortized-loan (PMT) payment with monthly compounding, computed once and never changed.
The worked example throughout is a fictional $280,000 loan at 6.75% over 30 years. The engine's payment for it is $1,816.07 a month. The first of those three operations can be followed by hand for month one, because the opening balance is the whole loan: interest is $280,000 × 6.75% ÷ 12 = $1,575.00, and only $241.07 of the $1,816.07 payment reaches principal — 86.7% of the first payment is interest. From month two on the balance is no longer a round figure, and the engine carries the arithmetic: every month repeats the same shift on a slightly smaller balance, and the calculator reports the result one year at a time.
The engine's final row shows where the shift ends. In year 30 it records $776 of interest against $21,017 of principal — the reverse of year one. The engine never lets a principal portion exceed the remaining balance and stops when the balance is within a fraction of a cent of zero, so the final Balance reads $0.00 after 360 months.
Why the Interest column starts large
In year one the balance is never far below the full loan, and interest in this engine is a percentage of the balance, nothing else. The first year row records $18,809 of interest against $2,984 of principal, and the Balance column ends the year at $277,016: the loan has fallen by 1.1%. The row is not twelve copies of month one — month one's interest times twelve would be $18,900.00, and the engine's figure is $18,808.80 because the balance fell a little each month. The same mechanism runs the whole schedule: the Balance column first falls below half the original loan during year 22 — that row ends at $134,428 — and what remains is repaid over the final 8 years. The schedule front-loads nothing; the interest charge in this engine is the balance times the monthly rate, and the balance is simply large for a long time.
The year row in which principal overtakes interest
Without an extra payment, every full-year row's Principal and Interest add up to twelve payments — $21,793 in the example, an identity this page checks for every row when it builds — so the Principal exceeds the Interest in the first row whose interest charge falls below half of that, $10,896. The calculator reports the schedule by year, and that is the granularity at which it shows the flip: for the example it is year 21, the first row whose Principal ($11,467) exceeds its Interest ($10,325). Year 20 is the last row the other way round, $11,072 of interest against $10,721 of principal. The single month inside year 20 or 21 at which the two portions change places is not a figure the calculator reports.
The rate and the term alone set where the flip falls — the loan amount scales every column and, in this engine's arithmetic, leaves the flip year where it is; the page re-checks that while it builds, at twice and at half the example's size. A shorter term raises the payment and a lower rate shrinks the interest charge; either moves the flip earlier. The engine reports the consequence, not a preference between them.
| Rate | 15 years | 30 years |
|---|---|---|
| 4.5% | year 1 ($2,141.98 / month) | year 16 ($1,418.72 / month) |
| 6.75% | year 6 ($2,477.75 / month) | year 21 ($1,816.07 / month) |
| 9% | year 8 ($2,839.95 / month) | year 23 ($2,252.94 / month) |
Reading the year rows
The calculator compresses the monthly schedule into one row per year. Principal is the sum of the twelve principal portions, Interest the sum of the twelve interest charges, and Balance the amount still owed after the year's last payment — an end-of-year figure, so each row's Principal is exactly the fall in Balance from the row above.
| Year | Principal | Interest | Balance |
|---|---|---|---|
| 1 | $2,984 | $18,809 | $277,016 |
| 5 | $3,906 | $17,887 | $262,852 |
| 10 | $5,469 | $16,324 | $238,843 |
| 15 | $7,657 | $14,136 | $205,227 |
| 20 | $10,721 | $11,072 | $158,161 |
| 25 | $15,011 | $6,782 | $92,264 |
| 30 | $21,017 | $776 | $0 |
Two identities tie the table to the summary lines above it. The Principal column sums to the loan amount, $280,000. The Interest column sums to the Total interest line, $373,787 — about 1.3× the amount borrowed over 30 years at 6.75%. Total of payments is the loan amount plus that interest, $653,787, not the payment multiplied by the number of months. The methodology page's reference loan, $200,000 at 6% over 30 years, run through the same schedule returns $1,199.10 a month, $231,676 of total interest and 360 months — the figures the methodology page and the automated tests expect.
What a fixed extra payment does to the rows
The Mortgage Payoff Calculator hands the engine the same loan plus an extra principal amount per month, and the engine runs the schedule twice: without it, and with it added to every payment from month one until the balance reaches zero. Example X adds a fictional $175 a month to the example loan: the payment stays $1,816.07, the total paid each month becomes $1,991.07, and in month one — the same one-step derivation as above — the principal portion rises from $241.07 to $416.07 while the interest charge is unchanged at $1,575.00. The extra reaches the balance, and the next month's interest is charged on the smaller figure.
The comparison lines report where that leads. The schedule with the extra ends in month 280 instead of month 360, so the headline reads "Pay off 6 yr 8 mo sooner" and New payoff time shows 23 yr 4 mo where it was 30 yr. Interest saved is the difference between the two schedules' interest totals — $373,787 without the extra, $275,719 with it, so $98,068. The extra schedule's last row is a short one: the loan ends partway through year 24, so that row covers 4 months and closes at $0.00.
| Extra per month | Payoff | Sooner by | Interest saved | Rows in the table |
|---|---|---|---|---|
| $50 | 27 yr 8 mo | 2 yr 4 mo | $35,665 | 28 |
| $175 | 23 yr 4 mo | 6 yr 8 mo | $98,068 | 24 |
| $350 | 19 yr 4 mo | 10 yr 8 mo | $152,265 | 20 |
Doubling the extra does not double the months or the interest saved, because each added dollar meets a schedule already shortened by the dollars before it. The engine compares; whether a higher monthly outlay fits a household's budget is not a question the arithmetic answers.
Where the engine stops
The limits are the engine's, and the methodology page states them: the calculators model fixed-rate, fully amortizing loans and "do not model adjustable-rate mortgages, interest-only periods, balloon payments, or negative amortization." The extra payment is one fixed amount from month one — there is no input for a lump sum, a later start or a changing amount. The schedule knows no calendar: "payoff time" is a count of months, not a date. Interest is charged once a month at the annual rate ÷ 12; the engine does not know your lender's day-count or rounding conventions, and the schedule has no fee, tax, insurance or escrow lines — it is principal and interest only.
Inputs are validated before any arithmetic runs, and a value the engine cannot use comes back as a message rather than a number. Ask for a term beyond the supported range and it answers "Terms are limited to 60 years." Enter a negative rate and it answers "The interest rate cannot be negative." Ask the payoff comparison for an extra of zero and it answers "Enter an extra monthly payment greater than 0." A rate of exactly zero is accepted and divides the principal evenly across the term: the example loan at 0% has a payment of $777.78 and $0 of interest.
Common misreadings
- Reading Balance as a start-of-year figure. It is the amount owed after the year's last payment; the balance at the start of year 2 is the figure on the row for year 1, $277,016 in the example.
- Taking Total of payments as the whole cost of the house. The schedule holds principal and interest only; the Mortgage Calculator adds tax, insurance, PMI and HOA as separate monthly lines from the figures you enter.
- Reading Interest saved as a refund. It is the gap between two schedules' interest totals, computed by running both — not money paid and returned.
Frequently asked questions
Why is the first year’s Interest figure so much larger than its Principal figure?
Because interest is charged on the balance still owed, and in year one that balance is close to the whole loan. In the worked example the first row records $18,809 of interest against $2,984 of principal. The schedule front-loads nothing; the interest charge in this engine is the balance times the monthly rate, and the balance is simply large for a long time.
In which row does principal overtake interest?
It falls out of the schedule and depends on the rate and term. The calculator reports the schedule by year, so the flip appears as the first row whose Principal exceeds its Interest: for the fictional $280,000 loan at 6.75% over 30 years that is year 21, and year 20 is the last row in which interest exceeds principal.
Does the monthly payment change when an extra payment is added?
No. The scheduled payment is computed from the loan, rate and term and left alone; the extra is added on top every month from month one. In Example X the payment stays $1,816.07, the total paid each month is $1,991.07, and the number of payments falls from 360 to 280.
What does the Balance column show?
The principal still owed after the last payment of that year — an end-of-year figure, not a start-of-year one. The final row’s balance reads zero — the engine stops when the balance is within a fraction of a cent of zero — and each row’s Principal figure is exactly the fall in Balance from the row above.
Why does the last row sometimes cover less than a full year?
When extra payments end the loan partway through a year, the engine closes the schedule in the month the balance reaches zero and reports the remaining months as a final, shorter row. In Example X the loan ends in month 280, so row 24 covers 4 months.
A calculator, not advice: the calculator models the arithmetic; it does not know your lender's terms. The figures on this page are rounded views of full-precision values — your lender's figure may differ by a few cents depending on their rounding and day-count conventions, and the difference is presentational, not an error. For consequential financial decisions, verify results independently and consult a licensed mortgage professional. See the methodology page for how every calculator on this site is built and tested.