Balance over time
The balance line curves rather than falling straight because early payments are mostly interest — the table below is the same schedule year by year.
Remaining balance, end of each year
| Year | Principal paid | Interest paid | Balance |
|---|
How it works
Every payment is the same size, but the split between interest and principal shifts over the life of the loan: early payments are mostly interest, because interest is charged on the full remaining balance, which is largest at the start. As the balance shrinks, more of each fixed payment goes toward principal, which is why the balance line curves rather than falling in a straight line.
monthly rate r = annual rate ÷ 12 ÷ 100, n = term (years) × 12
payment = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1)
each month: interest = balance × r, principal = payment − interest, balance −= principal
Worked example
A $400,000 loan at 6% annual interest over 30 years.
- Monthly rate: 6% ÷ 12 = 0.5%. Payments: 30 × 12 = 360.
- Payment = $400,000 × 0.005 × (1.005)³⁶⁰ ÷ ((1.005)³⁶⁰ − 1) = $2,398.20/month.
- Over 360 payments: total paid = $863,353.
Total interest over the full 30 years comes to $463,353 — more than the original loan amount, which is typical for a 30-year term at this rate.
Common questions
Why is so much of the early payments interest?
Because interest is charged on whatever balance remains, and the balance is at its highest right at the start. On a 30-year loan it's common for it to take a decade or more before a payment is more principal than interest.
Does this include property tax, insurance or PMI?
No — this is principal and interest only, the core loan repayment. Real monthly housing costs in the US often add property tax, homeowners insurance, and mortgage insurance if the down payment is under 20%, none of which this calculator estimates.
How much would extra payments save?
Any extra amount goes straight to principal, which reduces the balance interest is calculated on for every remaining month — so extra payments made earlier in the term save more than the same amount paid later. This calculator shows the standard schedule; adding extra-payment modeling is a natural next step for this page.