How to Calculate an Amortization Schedule by Hand
Amortization schedules help you understand how much interest you’ll pay and how your principal will decrease over time. Calculating it by hand helps you understand the process and avoid relying on software.
- Enter your loan amount, interest rate, and loan term.
- Click “Calculate”.
- View your amortization schedule and chart.
The formula for calculating the monthly payment is:
M = P [ i(1 + i)^n ] / [ (1 + i)^n — 1 ]
Where:
- M = monthly payment
- P = principal loan amount
- i = monthly interest rate
- n = number of months
| Loan Amount | Interest Rate | Loan Term | Monthly Payment |
|---|---|---|---|
| $100,000 | 5% | 30 years | $599.55 |
| $200,000 | 4% | 20 years | $1,199.10 |
- Consider refinancing if your interest rate is high.
- Make extra payments to pay off your loan faster.
- Understand the difference between interest and principal.
What is an amortization schedule?
An amortization schedule is a table that shows how much interest and principal you’ll pay each month, and how your loan balance will change over time.
IRS Publication 936 provides more information on amortization.
CFPB’s Ask CFPB explains amortization in plain language.