Loan & Mortgage Payment Calculator

How the monthly payment is worked out

An amortizing loan is one where every payment is the same size and the balance lands exactly on zero at the end. Making that come out even takes one formula:

M = P × r / (1 − (1 + r)−n)

P is the amount borrowed, n is the number of monthly payments, and r is the monthly rate — the annual rate divided by 12, then by 100. A 6% loan has a monthly rate of 0.005. The formula is nothing more exotic than asking what a stream of n equal payments is worth today, then running it backwards.

Two things about it catch people out. The payment does not scale with the term the way intuition says: stretching a mortgage from 15 years to 30 cuts the payment by much less than half, because you carry the balance for twice as long. And the rate matters more than the amount borrowed. On a 30-year loan, one percentage point changes the total interest by far more than one percent.

Where the money actually goes

Open the schedule and look at year one. Interest each month is simply the outstanding balance times the monthly rate, and at the start the balance is at its highest — so most of the payment is interest and barely any of it touches the debt.

On a 30-year loan at 6%, about a sixth of the first payment goes to principal. The rest is rent on the money. The crossover point, where principal finally exceeds interest in a single payment, arrives around year 18. Over the full term you repay roughly 2.16 times what you borrowed: the interest comes to more than the loan itself.

This is also why refinancing resets more than the rate. Start a fresh 30-year schedule ten years in and you go back to the part of the curve where almost nothing comes off the balance.

What an extra payment buys

Extra money has no interest attached to it yet, so every unit of it comes straight off the principal — and with it, every future month of interest that principal would have accrued. That is why the savings look disproportionate. An extra payment in year two is worth several times the same payment in year twenty.

One practical warning: some lenders apply anything above the scheduled amount to your next payment rather than to the principal, which does almost nothing for you. If you are overpaying deliberately, say so in writing. A minority of loans, more common outside the United States, also carry early repayment charges that can wipe out the benefit.

What this calculator leaves out

It models principal and interest, and nothing else. That is a real limitation, not a footnote:

• Escrow. Property tax, home insurance, mortgage insurance and HOA dues are not here. On a typical US mortgage they can add a third again to the bill that actually leaves your account.
• Fees. This is the interest rate, not the APR. APR folds origination fees and points into a single annualised number, which is why the APR on your paperwork is higher than the rate you were quoted. Comparing two offers by rate alone is how you pick the more expensive one.
• Variable rates. Everything assumes the rate never moves. For a tracker or an adjustable mortgage, run it once at today's rate and once at a rate you would find uncomfortable.
• Compounding convention. This divides the annual rate by 12, which is the US convention. Canadian fixed-rate mortgages are quoted with semi-annual compounding under the Interest Act, and most UK mortgages calculate interest daily on the outstanding balance. Against your lender's figure, expect a discrepancy of a few units of currency, not a few hundred.
• Rounding. The payment is rounded up to the cent so the balance clears inside the term, which leaves the final payment slightly smaller than the rest. Real lenders do the same thing, which is why your last statement never matches the others.

Nothing you type is sent anywhere. The arithmetic happens in this tab, which is worth knowing before you put a real loan balance into a calculator on someone's server.

Last updated September 19, 2026