Amortization Schedule
Where does your mortgage payment actually go each month? Spoiler: early on, most of it goes to interest. Let's see the full picture.
Cal says: Here's a secret: making just ONE extra payment per year can shave 4-5 years off a 30-year mortgage. Your future self will thank you.
Monthly Payment
$1,896
Total Interest
$382,633
Total Cost
$682,633
Interest Crossover
Year 20
The Crossover Point: It takes until Year 20 before more of your monthly payment goes toward principal than interest. That means for the first 19 years, most of your payment is basically rent you're paying to the bank. This is why extra payments early on can save you tens of thousands.
Principal vs. Interest Over Time
Year-by-Year Breakdown
| Year | Principal | Interest | Remaining Balance |
|---|---|---|---|
| 1 | $3,353 | $19,401 | $296,647 |
| 2 | $3,578 | $19,177 | $293,069 |
| 3 | $3,817 | $18,937 | $289,252 |
| 4 | $4,073 | $18,681 | $285,179 |
| 5 | $4,346 | $18,409 | $280,833 |
| 6 | $4,637 | $18,118 | $276,196 |
| 7 | $4,947 | $17,807 | $271,249 |
| 8 | $5,279 | $17,476 | $265,970 |
| 9 | $5,632 | $17,122 | $260,338 |
| 10 | $6,009 | $16,745 | $254,328 |
| 11 | $6,412 | $16,343 | $247,916 |
| 12 | $6,841 | $15,913 | $241,075 |
| 13 | $7,299 | $15,455 | $233,776 |
| 14 | $7,788 | $14,966 | $225,987 |
| 15 | $8,310 | $14,445 | $217,677 |
| 16 | $8,866 | $13,888 | $208,811 |
| 17 | $9,460 | $13,294 | $199,351 |
| 18 | $10,094 | $12,661 | $189,257 |
| 19 | $10,770 | $11,985 | $178,487 |
| 20← crossover | $11,491 | $11,263 | $166,996 |
| 21 | $12,261 | $10,494 | $154,735 |
| 22 | $13,082 | $9,673 | $141,653 |
| 23 | $13,958 | $8,797 | $127,695 |
| 24 | $14,893 | $7,862 | $112,803 |
| 25 | $15,890 | $6,864 | $96,912 |
| 26 | $16,954 | $5,800 | $79,958 |
| 27 | $18,090 | $4,665 | $61,868 |
| 28 | $19,301 | $3,453 | $42,567 |
| 29 | $20,594 | $2,161 | $21,973 |
| 30 | $21,973 | $781 | $0 |
What Does This Mean for You?
How Amortization Actually Works (The Math, Made Human)
The word amortize comes from the Latin admortire — literally "to kill off." Each payment you make is a tiny dagger to the loan balance. The catch is that early daggers are dull. Most of the early swing goes to interest, and only a sliver of metal actually touches the principal.
Here's the mechanic. Every month the lender multiplies your remaining balance by the monthly interest rate (your annual rate divided by 12). That number is the interest charge. Whatever's left of your fixed monthly payment after the interest charge gets applied to principal. Because the balance is huge in year one, the interest portion is huge too. As the balance shrinks, the interest charge shrinks, and a bigger slice of the same fixed payment finally hits principal. That's why amortization curves look like a hockey stick: slow at first, then suddenly accelerating in the back half.
Concrete example: a $300,000 loan at 6.5% over 30 years has a monthly payment of about $1,896. Of that very first payment, roughly $1,625 is interest and only $271 is principal. By month 360 (the last one), it's flipped almost entirely the other direction — about $10 interest and $1,886 principal. Same $1,896 payment, completely different breakdown. The amortization schedule above shows you exactly when this flip happens for your numbers.
Three Ways to Beat the Amortization Curve
1. The "13th payment" trick
Divide your monthly payment by 12 and add that amount to every check. On a $1,896 payment, that's an extra $158/month. Over a year you've quietly made one full extra payment, and on a 30-year loan that single change can shave 4–5 years off your term and save roughly $60,000 in interest. The lender doesn't advertise this because it kills their interest income — which is exactly why you should do it.
2. Biweekly payments
Pay half your mortgage every two weeks instead of once a month. Because there are 52 weeks in a year (not 48), you end up making 26 half-payments — the equivalent of 13 monthly payments. Same outcome as the 13th payment trick, just on autopilot. Be careful though: some servicers charge a fee to "set up" biweekly billing. Don't pay it. Just send the extra principal yourself with a note that says "apply to principal."
3. Lump-sum principal-only payments
Tax refund? Bonus? Inheritance? Sending a one-time $5,000 principal-only payment in year 2 of a 30-year loan can save you over $15,000 in interest and chop more than a year off the loan. The earlier the payment lands, the bigger the multiplier — because that money never gets a chance to accrue 28 more years of compounding interest.
Amortization Schedule FAQ
Why does the bank front-load all the interest?
It's not a conspiracy — it's just math. Interest is always calculated on the remaining balance. In month one, the balance is enormous, so interest is enormous. The bank isn't choosing to "charge interest first"; it's charging interest on what you still owe. The fixed payment just absorbs whatever's left after that.
If I refinance, does the clock reset?
Yes — and this is the trap. Refinancing a 30-year loan into a new 30-year loan after 7 years means you're committing to 37 total years of mortgage payments. Even at a lower rate, you may pay more interest overall because you're back in the front-loaded portion of a fresh schedule. Always run the new amortization schedule before refinancing.
What's the difference between a 15- and 30-year loan, really?
A 15-year is a forced savings plan with handcuffs. The payment is roughly 50% higher, but you build equity dramatically faster and the total interest is cut by more than two-thirds. On our $300k example, a 30-year at 6.5% costs about $382,000 in interest. The same loan at 15 years (typically 0.5% lower rate, so 6.0%) costs about $156,000 — a $226,000 swing.
Should I make extra payments or invest the money instead?
Pure math: if your mortgage rate is 6.5% (guaranteed return when you prepay) and the stock market historically averages ~7% after inflation, investing wins by a hair — but only on average and only over decades. Behavior matters too. Paying down a mortgage is psychologically powerful and risk-free. Many people do both: max the 401(k) match, then split extra cash between investing and principal payments.
Are extra payments tax-deductible?
No. Only the interest you pay is potentially deductible (if you itemize). Principal payments aren't tax-deductible — but that's actually good news. It means every extra dollar of principal goes 100% to wealth-building with no taxman involved.