How to read a mortgage amortization schedule

Every mortgage comes with an amortization schedule — usually 360 rows for a 30-year loan, one row per monthly payment. The schedule shows exactly how each payment is split between interest and principal, and how the balance reduces over time. Most borrowers never read it. The four numbers worth pulling out repay the 10 minutes it takes.

The columns explained

A standard schedule has five columns:

For a $400,000 loan at 7% over 30 years, the monthly payment is $2,661.21 (computed from the standard amortisation formula). Month 1: $2,333.33 of that is interest, $327.88 is principal, balance drops to $399,672.12. Month 360: $15.45 interest, $2,645.76 principal, balance hits zero.

The four numbers worth knowing

1. Total interest paid over the loan life

Sum of the interest column for all 360 months. On a $400k loan at 7% over 30 years: $558,036. This is what the bank actually earns on the loan; everything else is accounting.

Sanity check: total payments (360 × $2,661.21 = $958,036) minus principal ($400,000) = $558,036. Same number, two ways.

2. Year-5 remaining balance

Look at month 60. On the same loan: $376,746. Only $23,254 of principal has been paid off in five years despite $159,673 in total payments. The bank received $136,419 in interest in those five years.

Practical meaning: if you sell at year 5 you walk away with essentially your down payment plus any home appreciation. The mortgage has not built meaningful equity yet.

3. The crossover month — when principal exceeds interest

On the 7% / 30-year loan, the principal portion exceeds the interest portion starting at month 234(year 19.5). Before that, more than half of every payment is interest. After that, you finally start paying down the loan faster than you’re paying for it.

The crossover happens earlier at lower rates and later at higher rates:

4. How much an extra $100/month saves

Pay an extra $100 against principal every month starting from month 1, and the 7% / 30-year loan finishes in about 26 years instead of 30, with total interest reduced by ~$74,000.

That’s a 750% return on $100/month over 4 years of early payoff. Most personal-finance interventions are nowhere near this lever — and yet most homeowners don’t use it.

The hidden message: early-year extra payments compound

An extra $1,000 paid against principal in month 1 of a 7% loan saves roughly $7,000in interest over the loan’s life. The same $1,000 paid in month 240 saves $500. The amount depends on how many months of compounding interest the early payment avoids.

This is the principle behind any “pay down your mortgage early” strategy. The math works because early years are interest-heavy, and any principal you skip paying interest on is principal you compound less against for the remaining loan life.

How to use the schedule when shopping rates

1. Don’t compare monthly payments.A 0.5% lower rate looks like “only $130/month cheaper”. Multiply by 360. That’s $47,000 over the loan’s life.
2. Compare total interest. Sum the interest column. The bigger this number, the more expensive the loan over its lifetime.
3. Check year-5, year-10 balances. If you might sell or refinance, the relevant number is your equity at that horizon, not at year 30.
4. Run the extra-principal scenario.Most online calculators support “extra $X per month”. See the lifetime interest savings; compare against investing the same $X.

Generate your own schedule

Our mortgage calculator produces the full amortization schedule for any loan parameters, with year-by-year and month-by-month options. For the same loan at multiple rates side by side, see our 30-year true cost data study.

The pragmatic takeaway

The amortization schedule is the loan’s actual contract in numbers. Looking at it once per year — total interest paid, current balance, time to crossover — is worth more than reading any number of mortgage advice articles. It tells you exactly where you are and what the bank still expects to earn.

Sources: CFPB “Understanding loan amortization” consumer guide (2024); standard amortisation formula per Brealey, Myers, & Allen, Principles of Corporate Finance (13th ed.).