Mortgage Interest and Principal Calculator

The calculator on this page demonstrates what portion of your monthly mortgage payment goes towards reducing your principal balance and what portion goes towards interest. The chart below shows how this balance changes over the life of your mortgage (Learn more) .

Principal and Interest are the two key components of a mortgage. Principal refers to the amount of money that you borrow from a bank while Interest refers to the cost of borrowing that money. A portion of the mortgage payment you make each month goes towards reducing your loan’s principal while another portion of it goes towards paying for the interest on your loan.

The balance between which portion of your monthly mortgage payment goes towards principal and which portion goes towards interest changes over the life of your mortgage. Because interest only accrues on your outstanding principal balance, a large part of your monthly payment goes toward interest and only a small portion towards principal when your principal balance is highest at the beginning of your loan. However, as your principal balance decreases over time, a larger part of your monthly payment goes towards paying down your principal balance and less towards interest.

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Loan Interest Rate:
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Have questions about principal and interest? Fill out the Contact form on your left to have a HUD approved housing counselor contact you to help answer your questions.

THIS SUMMARY PROVIDES ESTIMATES ONLY . Before making any home or loan purchase decision, you should obtain the advice of a professional financial advisor who is aware of your individual circumstances. Please refer to the Terms Of Use for a complete description of the proper use of this information.

Understanding Your Results

Monthly Principal and Interest Payment: This is the amount you pay each month to your bank for Principal and Interest. If your interest rate does not change over the course of your loan, this value will be the same each month for the life of your loan. Notice that this value does not account for property taxes and insurance.

Principal Payment: Principal is the portion of your monthly mortgage payment that goes towards paying off your loan. Depending on your interest rate, only a small portion of your monthly mortgage payment goes towards your principal each month when you first buy your home. However, as your principal payments slowly reduce your loan balance, more of your monthly payment begins to go towards principal to help pay off your loan completely.

Interest Payment: Interest is the portion of your monthly mortgage payment that is paid to the bank as a fee for letting you borrow money. At the beginning of your loan, when your balance is at its highest, most of your monthly payment goes towards paying interest. However, as you slowly reduce your balance through paying principal, less of your monthly payment goes towards interest and more goes towards principal.