3 min read
How to read a mortgage amortization schedule
What each row of an amortization schedule means, why early payments are mostly interest, and how to compare two terms or rates.
The schedule in one paragraph
An amortization schedule is the loan written out one month at a time: payment, interest, principal, and the balance left afterward. On a fixed-rate loan the payment stays level while the split inside it changes. The amortization calculator builds that full table in your browser.
The formula in plain English
The level payment comes from the standard fixed-rate formula. Each month after that:
Interest = balance × (annual rate / 12)
Principal = payment − interest
New balance = balance − principal
The first row charges interest on the entire loan. The last row clears whatever balance remains. There is no extra principal in this table, and there is no escrow.
A worked example
On 300,000 at 6.5% for 30 years, month 1 sends most of the payment to interest. A year later the interest slice is a little smaller because the balance is a little smaller. Near the end, almost the whole payment is principal. Switch Scenario B to 15 years at the same rate and every row shows a higher payment, a faster drop in balance, and less interest in total. You can also change only the rate — for example the quote you were given to refinance — while keeping the loan amount fixed.
How to read the result
Scroll the table; it is one row per month, not a sample. The chart is the same story compressed to year-end balances. If two lines are visible, gray-green is not the point: Scenario A and Scenario B are labeled on the chart. A schedule that looks “expensive” in month 1 can still be the one that costs less interest. Read the total interest card before you judge a single row.
When you want taxes, insurance, or PMI in the housing payment, use the mortgage payment calculator. When the question is closing costs versus a new loan, use the refinance calculator. Extra payments that shorten the term live on the payoff calculator.
What people mix up
The schedule is not your statement if the statement includes escrow. It is also not an APR. APR can include fees this table never sees. And the interest in month 1 is not the interest in month 200. That change is the entire reason the table exists.
FAQ
Why is so much of the first payment interest?
Interest is charged on the remaining balance. At the start, that balance is the full loan, so the interest slice is large. Principal gains share only as the balance falls.
Can I see 15 years next to 30?
Yes. Scenario B keeps the loan amount and lets you change the term, the rate, or both. Each scenario has its own full table.
Does the balance include property tax?
No. Tax and insurance are not part of this loan balance. Add them only on the payment calculator, where they stay outside the amortization.
Can I fill the rate from a market average?
Yes. The 30-year average fills the mortgage rate from the Freddie Mac PMMS, and you can still edit the field. The link stores the number you apply. Indicative rate, not a recommendation.
Is this financial advice?
No. It is an educational schedule. Your servicer’s table is the one tied to your note, rounding, and fees.
Related guides
- How much home you can afford — start from income, then come back to the month-by-month split.
Try it with your figures
Open the amortization schedule, set the loan, rate, and term, and scroll the first year beside the last year. Then add Scenario B if you are choosing between two quotes. The link in the address bar is the share URL — nothing is sent away to be calculated.