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Amortization Schedule (first 24 months)
| Month | Payment | Principal | Interest | Balance |
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Understanding Your Mortgage Payment
A mortgage payment is made up of four components, often abbreviated as PITI: Principal, Interest, Taxes, and Insurance. The principal is the actual amount you borrowed and are paying back. The interest is the lender's charge for lending you that money, calculated as a percentage of your remaining loan balance. Property taxes and homeowners insurance are usually collected monthly and held in an escrow account, then paid on your behalf when they're due annually.
Early in a 30-year loan, the majority of each payment goes toward interest rather than principal — this is normal and is how amortized loans work. As the loan balance decreases over time, more of each payment shifts toward paying down principal. This calculator's amortization table above shows exactly how that split changes month by month.
The Monthly Payment Formula
Your principal and interest payment is calculated using the standard amortization formula:
M = monthly payment
P = loan principal (home price − down payment)
r = monthly interest rate (annual rate ÷ 12)
n = total number of payments (years × 12)
Property tax and insurance are then added on top of this principal and interest figure to get your total monthly payment.
Worked Example
A $350,000 home with a 20% down payment ($70,000) leaves a $280,000 loan. At a 6.8% interest rate over 30 years, the principal and interest payment is approximately $1,827/month. Adding $350/month in property tax and $100/month in homeowners insurance brings the total monthly payment to roughly $2,277. Over the full 30-year term, total interest paid comes to about $377,800 — more than the original loan amount, which is why even a small rate reduction or extra payment can save tens of thousands of dollars.
Tips to Reduce Your Total Interest
- Make a larger down payment — putting down 20% or more avoids private mortgage insurance (PMI) entirely, which can save $100–300/month.
- Choose a 15-year term over 30-year — the monthly payment is higher, but total interest paid is typically 50-60% lower.
- Make extra principal payments — even an extra $100-200/month can cut years off your loan and save tens of thousands in interest.
- Switch to biweekly payments — paying half your monthly payment every two weeks results in one extra full payment per year, accelerating payoff.
- Shop multiple lenders — even a 0.25% rate difference on a $300,000 loan changes total interest by over $15,000 across 30 years.