Home Profit Calculator

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Back to basics: What is mortgage amortization? When you take out a mortgage, you don't just pay back what you borrowed — you also pay interest. Amortization is simply the process of spreading those payments out evenly over time, so you pay the same amount every month for the life of the loan.

Think of it like this: in month one, your $400,000 loan is huge, so the bank charges a lot of interest. Most of your payment goes to them. But as you slowly pay down the balance, the interest charge shrinks — and more of that same payment chips away at what you actually owe. By the end, almost your entire payment is pure principal.

It's the same fixed payment every month. What changes is where it goes. How this is calculated Each month your payment splits into two parts: interest (what the bank keeps) and principal (what reduces your balance). Early on, most of your payment is interest — that flips over time.

Monthly payment uses the standard amortization formula:
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
where P = loan amount, r = monthly rate (annual ÷ 12), n = total months.

Remaining balance at any point uses the prospective method — the same formula as Bankrate, NerdWallet and every standard mortgage calculator. Factors that affect your amortization Interest rate — the single biggest lever. A 1% lower rate can save you tens of thousands over the life of your loan. Even a small difference compounds fast over 30 years.

Loan term — a 15-year mortgage builds equity twice as fast as a 30-year, but your monthly payment is higher. A 30-year keeps payments lower but you pay far more interest overall.

Down payment — the more you put down, the smaller your loan, the less interest you pay every single month. A bigger down payment also means no PMI (private mortgage insurance) above 20%.

Extra payments — even $100/month extra goes 100% to principal. This can shave years off your loan and save thousands in interest — your bank won't tell you this.

When you sell — if you sell early (say year 3), you've mostly paid interest and built very little equity. The longer you hold, the more of each payment goes to you instead of the bank. How to use this calculator 1. Enter your purchase price — type the home price you're targeting or drag the slider.

2. Set your down payment — enter the % you plan to put down. Higher means a smaller loan and less interest over time.

3. Add your interest rate — use your actual quote from a lender, or a realistic estimate. Even 0.5% makes a big difference.

4. Choose your loan term — 30 years keeps payments low, 15 years saves a lot of interest. Pick what fits your budget.

5. Set how long before you sell — the chart will mark exactly where you'd be when you sell — how much equity you've built and how much interest you've paid.

The orange bars show money that goes to the bank (interest). The green bars show equity you're building. Your goal: sell when the green outweighs the orange.