Where every dollar of a mortgage payment goes
How mortgage interest works, one payment at a time
Visual Cost & Payment Breakdown · Amortize
In one paragraph
On a standard fixed-rate mortgage, each month's interest is the outstanding balance times the annual rate divided by twelve. The payment stays the same, so as the balance falls, less goes to interest and more to principal. Paying extra principal shrinks the balance sooner, which cuts the interest charged in every later month.
Last reviewed against the primary sources listed below.
ToolAmortization schedule with extra-payment sliderSee payoff date and interest change as you slide.1How monthly interest is computedThe one-line formula behind every statement.2Interest paid in arrearsWhy your first payment covers last month.3Extra principal: what changesTerm, interest, and what stays the same.4Biweekly plans examinedThe extra payment hiding in the calendar.5Recasting vs refinancingTwo ways to change a payment.6Mortgage interest and taxesForm 1098 and Publication 936.New guidePrepayment penaltiesWhether paying a mortgage off early can cost a fee, and how to check y.New guidePayoff vs balanceWhy the payoff figure differs from the principal balance on your state.GlossaryKey termsPlain definitions with sources.GuideExtra payment instructionsHow to tell your servicer to apply extra money to principal.GuideFirst paymentWhy the first payment usually comes a month or more after closing.PrintableLender questionsQuestions to bring to any lender, ready to print.
Who this is for
Owners who already have a loan and want to understand their statement, or are deciding whether to put spare money toward principal.