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 |
How to use this loan calculator
- Enter loan amount — principal borrowed before interest.
- Set annual interest rate and term — match lender quotes (APR) and number of payments.
- Review monthly payment and total interest — compare scenarios side by side if offered.
- Open the amortization schedule to see how much goes to principal vs interest each month.
- Model extra payments to see interest saved and months shaved off.
Sample monthly payments (6% APR, fixed rate)
| Loan amount | 5-year term | 10-year term | 30-year term |
|---|---|---|---|
| $10,000 | $193 | $111 | $60 |
| $25,000 | $483 | $277 | $150 |
| $50,000 | $967 | $555 | $300 |
| $100,000 | $1,933 | $1,110 | $600 |
Estimates only — taxes, fees, and insurance excluded.
How to calculate loan payment manually
Payment M = P × [r(1+r)n] / [(1+r)n − 1] where P is principal, r is periodic rate, n is number of payments.
Example: $20,000 auto loan at 5% APR for 48 months → r = 0.05/12, n = 48 → M ≈ $460.42/month.
Tips and common mistakes
- Comparing loans by payment only — a longer term lowers payment but raises total interest.
- Skipping the amortization table — early payments are mostly interest on long mortgages.
- Ignoring origination fees — add fees to effective cost or compare APR apples-to-apples.
- Variable-rate surprises — this model assumes fixed rates; ARM mortgages need separate stress tests.
More Q&A lives in the Frequently Asked Questions section below (matches FAQPage structured data).