How to Calculate Mortgage Amortization for Free

Mortgage amortization refers to how your mortgage gets paid off over time. Mortgages have a fixed monthly payment that remains the same even though the amount that goes toward interest payments and the amount that goes towards paying down the amount you owe changes on a monthly basis. To calculate your mortgage amortization, you should make an amortization schedule which requires you to know the interest rate, principal and monthly payment on your loan.

Determine the monthly interest rate on your mortgage by dividing the annual interest rate by 12. For example, if your annual interest rate is 7.8 percent, your monthly interest rate is 0.65 percent.

Create a four-column chart, and title the first column "Monthly Payment," the second column "Interest Payment," the third column "Principal Payment" and the fourth column "Mortgage Balance."

Enter your monthly payment in the first column.

Multiply your monthly interest rate by the previous line's "mortgage balance" column to determine the interest due. For the first month, multiply the monthly interest rate times the amount you borrowed. Write the result in the "Interest Payment" column. For example, if you borrowed $305,000 with a monthly interest rate of 0.65 percent, you will owe $1,982.50 in interest.

Subtract the amount of interest from your monthly payment, and write the result in the "Principal Payment" column. For example, if your monthly payment is $2,195.61 and you owe $1,982.50 in interest, write $213.11.

Subtract the amount of principal paid from the balance of the loan. For example, if $213.11 of your payment went towards principal and the balance of the loan is $305,000, your new balance is $304,786.89.

Repeat steps 3 to 6 until the "Mortgage Balance" column reaches zero, meaning you have paid off the mortgage.


  • If you do not want to calculate the amortization table by hand, you can find a number of mortgage amortization calculators online. (See resources below.)