Loan Calculator — Monthly Payment and Amortization
Our free loan calculator computes monthly payments, total interest, and full amortization schedules for any loan type. Use it for mortgages, auto loans, student loans, personal loans, or business loans. Compare two loan scenarios side by side, model the impact of extra payments, and download your amortization schedule as a CSV file.
Note: This calculator provides estimates for informational purposes only. For specific financial decisions, consult a qualified financial advisor or lender.
How Loan Payments Are Calculated
Most loans use amortizing payments — equal monthly payments that pay down both principal and interest simultaneously. The payment amount is calculated so that the final payment exactly pays off the remaining balance.
The monthly payment formula is: M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. This results in equal payments for the life of the loan.
How Amortization Works
Despite equal payments, the split between principal and interest changes with every payment. Early in the loan, most of each payment is interest because the balance is high. As you pay down the principal, the interest portion shrinks and the principal portion grows.
| Payment # | Payment | Principal | Interest | Remaining Balance |
|---|---|---|---|---|
| 1 | $1,580 | $225 | $1,354 | $249,775 |
| 12 | $1,580 | $237 | $1,343 | $247,344 |
| 60 | $1,580 | $275 | $1,305 | $241,700 |
| 120 | $1,580 | $323 | $1,257 | $234,768 |
| 180 | $1,580 | $381 | $1,199 | $226,362 |
| 240 | $1,580 | $449 | $1,131 | $216,133 |
| 300 | $1,580 | $529 | $1,051 | $203,557 |
| 360 | $1,580 | $1,572 | $8 | $0 |
Note: Values are approximate for illustration.
Common Loan Types and Typical Rates
| Loan Type | Typical Term | Rate Range (2024) | Notes |
|---|---|---|---|
| 30-Year Fixed Mortgage | 30 years | 6-8% | Most common home loan |
| 15-Year Fixed Mortgage | 15 years | 5.5-7.5% | Lower rate, higher payment, less interest |
| FHA Mortgage | 15-30 years | 6-8% | Low down payment, requires mortgage insurance |
| VA Loan | 15-30 years | 5.5-7.5% | Veterans only, no down payment required |
| Auto Loan (new) | 3-7 years | 5-9% | Secured by vehicle |
| Auto Loan (used) | 3-5 years | 7-12% | Higher rates than new car loans |
| Student Loan (fed) | 10-25 years | 5-8% | Depends on loan type and year |
| Personal Loan | 1-7 years | 7-25% | Unsecured, rate depends on credit score |
| Business Loan | 1-10 years | 6-15% | Varies widely by lender and type |
| Credit Card | Revolving | 20-30% | Minimum payments extend term indefinitely |
| HELOC | 10-20 years | 7-10% | Variable rate, secured by home equity |
How Interest Rate Affects Total Cost
Interest rate has a dramatic effect on total loan cost. Here is how different rates affect the total cost of a $300,000 30-year mortgage:
| Interest Rate | Monthly Payment | Total Paid | Total Interest | vs 4% Rate |
|---|---|---|---|---|
| 4.0% | $1,432 | $515,609 | $215,609 | — |
| 5.0% | $1,610 | $579,767 | $279,767 | +$64,158 |
| 6.0% | $1,799 | $647,515 | $347,515 | +$131,906 |
| 6.5% | $1,896 | $682,633 | $382,633 | +$167,024 |
| 7.0% | $1,996 | $718,839 | $418,839 | +$203,230 |
| 8.0% | $2,201 | $792,460 | $492,460 | +$276,851 |
The Power of Extra Payments
Making extra payments reduces your principal faster, which reduces the interest that accrues each month. The effect compounds over time — even small extra payments make a significant difference on long loans.
| Extra Monthly Payment | Interest Saved | Years Saved | (on $250,000 at 6.5% / 30yr) |
|---|---|---|---|
| $0 | $0 | 0 years | Baseline |
| $50 | $23,040 | 2.1 years | |
| $100 | $43,521 | 3.9 years | |
| $200 | $78,234 | 6.7 years | |
| $500 | $141,298 | 12.0 years | |
| $1,000 | $183,107 | 17.1 years |
Note: Values are approximate.
Mortgage Affordability Guidelines
Lenders use several rules of thumb to evaluate whether a mortgage payment is affordable:
| Rule | Recommendation | Example ($80,000 income) |
|---|---|---|
| Front-end ratio | Housing ≤ 28% of gross monthly income | Max payment: $1,867/month |
| Back-end ratio | All debt ≤ 36% of gross monthly income | Max total debt: $2,400/month |
| 28/36 rule | Combined front and back end limits | Both must be satisfied |
| FHA guideline | Housing ≤ 31%, total debt ≤ 43% | Slightly more lenient |
| Aggressive | Some lenders allow up to 45-50% DTI | Higher risk — not recommended |
Frequently Asked Questions
What is a good interest rate for a loan?
A "good" interest rate depends on the loan type, your credit score, and current market conditions. As a general guide: for mortgages, anything near or below the current 30-year average is favorable. For auto loans, below 7% for new cars is good. For personal loans, below 12% is competitive. Your credit score significantly affects the rate you qualify for — scores above 740 typically receive the best rates.
How do I pay off my loan faster?
The most effective strategies are: making extra principal payments (even $50-100/month makes a significant difference over time), making bi-weekly payments instead of monthly (results in one extra payment per year), refinancing to a shorter term if rates have dropped, and applying windfalls like tax refunds or bonuses directly to the principal.
What is the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal, expressed as a percentage. The APR (Annual Percentage Rate) includes the interest rate plus other costs like origination fees, mortgage insurance, and closing costs, expressed as a single annual percentage. APR is the more complete measure of loan cost and is required to be disclosed in the US under the Truth in Lending Act.
How much of my mortgage payment is tax deductible?
In the US, mortgage interest on a primary residence is generally tax deductible if you itemize deductions, up to $750,000 in loan principal (for loans taken after December 15, 2017). The amortization schedule in this calculator shows the interest portion of each payment, which is the deductible amount. Consult a tax professional for your specific situation.
Is it better to get a 15-year or 30-year mortgage?
A 15-year mortgage typically offers a lower interest rate and pays significantly less total interest, but has higher monthly payments. A 30-year mortgage has lower monthly payments but costs far more in total interest. The right choice depends on your cash flow, other financial goals, and how long you plan to stay in the home. Use the loan comparison feature to see the exact difference for your specific numbers.