What is a mortgage amortization schedule?

An amortization schedule is a table showing every monthly payment over the life of your mortgage, broken down into principal (paying down the loan balance) and interest (the cost of borrowing). In early years, most of each payment goes to interest. Over time, the split shifts until most goes to principal. The total monthly payment stays the same, but the ratio changes every month.

Why does so much go to interest at the start?

Because interest is calculated on the outstanding balance. In year 1, you owe the full loan amount, so interest charges are at their highest. As you pay down the principal, the balance shrinks, interest charges decrease, and more of your fixed payment goes to principal. It is a mathematical consequence of how compound interest works on a fixed-payment loan.

How much of my first payment goes to interest?

On a $300,000 loan at 7%: first payment is $1,996. Of that, $1,750 is interest and only $246 is principal. That means 87.7% goes to interest in month 1. By month 180 (year 15), the split is roughly 50/50. By the last year, almost all goes to principal.

When does more of my payment go to principal than interest?

On a 30-year mortgage at 7%, the crossover point is around year 18-20. Before that, more of each payment goes to interest. After that, more goes to principal. At 6%: crossover around year 16-17. At 8%: crossover around year 21-22. Higher rates push the crossover later.

Does making extra payments change the amortization schedule?

Yes. Extra principal payments reduce the outstanding balance faster, which reduces interest in all future months. This accelerates the shift from interest-heavy to principal-heavy payments. A $200/month extra payment on a $300,000 loan at 7% moves the crossover point from year 19 to year 13 and eliminates 6.5 years from the loan.

How do I read an amortization table?

Each row is one month. Columns show: payment number, payment amount (fixed), principal portion (increases over time), interest portion (decreases over time), and remaining balance (decreases to zero). The payment is always the same. The principal and interest columns change each month — interest shrinks, principal grows, and the balance drops until it reaches zero.

Mortgage Amortization Schedule Explained — Why You Pay So Much Interest in Year 1

Last updated: April 20267 min readCalculator Tools

On a $300,000 mortgage at 7%, your first monthly payment of $1,996 contains $1,750 of interest and only $246 of principal. You pay $1,750 to the bank and only $246 reduces your loan balance. By year 15, it is roughly 50/50. By year 28, almost all goes to principal. Here is the full breakdown.

Amortization Snapshot — $300,000 at 7%, 30-Year Fixed

Year	Monthly Payment	To Principal	To Interest	% to Interest	Remaining Balance
1 (Month 1)	$1,996	$246	$1,750	87.7%	$299,754
1 (Month 12)	$1,996	$264	$1,732	86.8%	$296,951
5 (Month 60)	$1,996	$354	$1,642	82.3%	$282,234
10 (Month 120)	$1,996	$509	$1,487	74.5%	$255,112
15 (Month 180)	$1,996	$731	$1,265	63.4%	$215,236
20 (Month 240)	$1,996	$1,050	$946	47.4%	$157,441
25 (Month 300)	$1,996	$1,509	$487	24.4%	$73,458
30 (Month 360)	$1,996	$1,985	$11	0.6%	$0

In month 1, you pay $1,750 in interest — nearly 88% of your payment. In month 360, you pay $11 in interest — less than 1%. Same payment amount, completely different allocation.

Total Interest by Year — Where the Money Goes

Cumulative interest paid at each milestone:

After Year	Total Interest Paid So Far	Total Principal Paid	% of Loan Paid Off
Year 1	$20,765	$3,187	1.1%
Year 5	$101,513	$17,766	5.9%
Year 10	$195,093	$44,888	15.0%
Year 15	$275,413	$84,764	28.3%
Year 20	$335,818	$142,559	47.5%
Year 25	$367,914	$226,542	75.5%
Year 30	$418,527	$300,000	100%

After 10 years of payments ($239,520 total), only $44,888 went to reducing your loan balance. The other $195,093 was interest — 81% of your payments went to the bank.

Why This Matters

Selling early is expensive: If you sell after 5 years, you have only paid off $17,766 of a $300,000 loan (5.9%). After closing costs, you may barely break even unless the home appreciated significantly.
Extra payments are most powerful early: An extra $200/month in year 1 saves far more interest than the same $200 in year 20, because early extra payments reduce the balance that accrues interest for decades.
Refinancing resets the clock: Refinancing to a new 30-year mortgage restarts the amortization schedule. You go back to paying mostly interest again, even if the rate is lower. Calculate whether the rate savings outweigh the reset.

Pair These Tools Together

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Percentage Calculator — calculate interest percentages

Honest Limitations

This analysis covers fixed-rate mortgage amortization. Adjustable-rate mortgages (ARMs) have different amortization patterns because the rate (and therefore the payment) changes at each adjustment period. Interest-only loans have no principal amortization during the interest-only period. The amortization schedule also does not include property tax, insurance, or PMI — those are additional costs on top of the principal and interest shown here.

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Mortgage Amortization Schedule Explained — Why You Pay So Much Interest in Year 1

Amortization Snapshot — $300,000 at 7%, 30-Year Fixed

Total Interest by Year — Where the Money Goes

Why This Matters

Pair These Tools Together

Honest Limitations

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