Loan Calculator
Standard amortization formula ยท By Stuart Mathieson · Updated October 2026
Results
Monthly Payment
Total Interest
Total Cost
| Month | Payment | Principal | Interest | Balance |
|---|
Results are estimates for illustration only and are not financial advice. Consult a qualified financial professional before making financial decisions.
How the loan calculator works
A fixed-rate loan is repaid in equal monthly payments. Each payment first covers the interest that built up on the balance that month, and whatever is left reduces the balance. The calculator finds the one payment that brings the balance to exactly zero on the final month, using the standard amortization formula:
- M
- - the monthly payment
- P
- - the loan amount (principal)
- r
- - the monthly interest rate: the annual rate ÷ 12 ÷ 100, so 6.5% a year is 0.0054167 a month
- n
- - the number of monthly payments: the term in years × 12
If the interest rate is 0%, the payment is simply the loan amount divided by the number of payments.
Worked example
Borrowing $250,000 at 6.5% for 30 years:
- The monthly rate is 6.5 ÷ 12 ÷ 100 = 0.0054167, and there are 30 × 12 = 360 payments.
- The formula gives a monthly payment of $1,580.17.
- Over 360 payments you pay $568,861.22 in total.
- Total interest is $568,861.22 − $250,000 = $318,861.22 - more than the amount borrowed.
In the first month, interest is $250,000 × 0.0054167 = $1,354.17, so only $226.00 of the payment reduces the balance. The split tips the other way at payment 233, about 19½ years in - from then on, most of each payment goes to principal.
How the rate and term change what you pay
These figures are for a $250,000 loan. A shorter term means a higher monthly payment but far less interest overall: at 6%, choosing 15 years instead of 30 saves about $160,000 in interest.
| Interest rate | 15-year payment | 15-year total interest | 30-year payment | 30-year total interest |
|---|---|---|---|---|
| 4% | $1,849.22 | $82,859.57 | $1,193.54 | $179,673.77 |
| 5% | $1,976.98 | $105,857.13 | $1,342.05 | $233,139.46 |
| 6% | $2,109.64 | $129,735.57 | $1,498.88 | $289,595.47 |
| 7% | $2,247.07 | $154,472.72 | $1,663.26 | $348,772.25 |
| 8% | $2,389.13 | $180,043.44 | $1,834.41 | $410,388.12 |
How the balance falls
For the same $250,000 loan at 6.5% over 30 years, here is how the payment splits at points along the way. Halfway through the term, nearly three-quarters of the original loan is still owed.
| Payment | Interest | Principal | Balance left |
|---|---|---|---|
| 1 | $1,354.17 | $226.00 | $249,774.00 |
| 12 (year 1) | $1,340.33 | $239.84 | $247,205.69 |
| 120 (year 10) | $1,150.34 | $429.83 | $211,940.32 |
| 180 (year 15) | $985.79 | $594.38 | $181,397.85 |
| 240 (year 20) | $758.25 | $821.92 | $139,163.21 |
| 300 (year 25) | $443.61 | $1,136.56 | $80,760.41 |
| 360 (final) | $8.51 | $1,571.66 | $0.00 |
Things to keep in mind
- Principal and interest only. For a mortgage, property taxes, homeowners insurance and mortgage insurance are often added to the monthly bill, so your actual payment can be noticeably higher.
- Interest rate vs APR. The APR also includes fees such as origination charges, so it is usually higher than the interest rate. Use the interest rate here to find your payment, and compare APRs with APRs when comparing lenders.
- Fixed rates only. With an adjustable-rate loan the payment changes when the rate resets, so treat the result as the payment at today's rate.
- Paying extra. Anything you pay above the required amount comes straight off the balance, which cuts the interest you pay later. The Credit Card Payoff Calculator shows how extra monthly payments shorten any balance.
- Rounding. Lenders round each payment to the cent, so the final payment on a real loan can differ slightly.
Frequently asked questions
What types of loans can I use this for?
Any loan with a fixed interest rate and fixed term repaid in equal monthly installments - mortgages, car loans, personal loans, and student loans.
Why does so much of my early payment go to interest?
Interest is charged on the remaining balance each month. Since the balance is highest at the start, more of your payment covers interest early on, shifting toward principal as the balance shrinks.
Does this include taxes, insurance, or fees?
No - this covers principal and interest only. For a mortgage, your actual monthly payment may also include property taxes, homeowners insurance, and other fees.
Is a 15-year or 30-year loan better?
A 15-year loan costs much less interest but has a higher monthly payment; a 30-year loan is easier to afford each month but costs far more overall. For $250,000 at 6%, the 15-year payment is $2,109.64 with $129,735.57 of total interest, compared with $1,498.88 a month and $289,595.47 of interest over 30 years.
Sources
- What is the difference between a loan interest rate and the APR? - Consumer Financial Protection Bureau
- What is the difference between a mortgage interest rate and an APR? - Consumer Financial Protection Bureau