Which repayment method is right for you?
Amortized (fixed payment)
The same payment every month for the life of the loan — the standard structure for US mortgages and auto loans. Early payments are mostly interest; later payments are mostly principal.
Equal principal
You repay the same amount of principal each month, so payments start higher and decrease over time. Total interest is the lowest of the three methods.
Interest-only
You pay only interest each month and repay the full principal at maturity. Monthly cost is lowest, but total interest is highest and you carry refinancing risk at the end of the term.
FAQ
Does this include taxes and insurance (PITI)?
No — this calculates principal and interest only. For a full mortgage budget, add property tax, homeowners insurance, and PMI (usually required when your down payment is below 20%).
How much does an extra payment save?
Extra principal payments shorten the loan and cut interest substantially — on a 30-year loan, even one extra payment per year can shave several years off the term. Check that your loan has no prepayment penalty.
What's the difference between APR and interest rate?
The interest rate is the cost of borrowing the principal; APR also includes lender fees and points, making it better for comparing offers between lenders.
Worked example
Borrow $300,000 over 30 years at 6.0% APR with fully amortizing payments and your monthly payment is about $1,799. Over 360 payments you would pay roughly $347,515 in interest — more than the original principal. Shorten the term to 15 years and the payment rises, but total interest falls by more than half, which is why term length matters as much as the rate itself.
FAQ
What is the difference between the interest rate and APR?
The interest rate is the cost of borrowing the principal; APR also folds in most upfront fees (origination, points) to express the true annual cost. When comparing two offers, compare APRs — a lower rate with high fees can cost more than a slightly higher rate with none. This calculator uses the rate you enter as the periodic interest rate.