Amortization Calculator

Year-by-year split of principal and interest across the loan.

Disclosure rules in the United States require a loan estimate within three business days of application and a closing disclosure three days before signing, which is what makes the figures comparable between lenders. Discount points buy a lower rate, and the break-even on that trade is measured in months rather than years.

An amortization schedule shows why a 30-year American mortgage barely moves at first: at a 7% rate roughly 88 cents of the first dollar of payment goes to interest, and the balance does not fall by half until around year 21. Lenders must hand over this schedule at closing under federal disclosure rules.

American home loans are priced as an annual rate compounded monthly, and the 30-year fixed remains the default: the rate is locked at closing and the payment never moves. Lenders also collect escrow for property tax and homeowners insurance, and a loan above 80% of the purchase price normally carries private mortgage insurance until the balance falls.

FHA, VA and USDA programmes trade looser credit rules for mortgage insurance premiums or funding fees.

Because a 30-year fixed loan makes 360 payments, a single point of rate moves lifetime interest by tens of thousands of dollars on a typical balance, which is why refinancing is judged on break-even rather than on the monthly figure alone.

Escrow is where the estimate drifts: property tax is reassessed after a sale in many states, so the first year's impound account can run short and the payment rises to cover the gap. Mortgage interest is also front-loaded, and the deduction only helps a household that itemises rather than taking the standard deduction.

Amortization Calculator sits with the rest of the library's finance work, and it rests on the same home-finance arithmetic the way a lender's disclosure or a bank statement does. Its answer is only as good as the assumptions standing behind it.

The quantities it works from — loan amount, interest rate, loan term, loan start date and extra monthly pay — are the ones a real home-finance question actually turns on, and each carries a convention of its own, set out below.

Money questions in America turn on the same few trade-offs: how long a balance is carried, what rate applies to it, and whether the money is being paid down or built up. Inflation sits behind all of them, since a figure that looks generous at today's prices buys less at tomorrow's, and comparisons across decades are made in real, inflation-adjusted terms.

American products also disclose their costs in prescribed ways, from the APR on a consumer loan to the annual percentage yield on a deposit account.