How this instrument works
A fixed-rate mortgage is repaid in equal monthly installments, but the mix inside each installment shifts as you go. Interest is charged on the balance you still owe, and that balance is largest at the start — so early payments are mostly interest. On the default sheet here ($280,000 borrowed at 6.5% over 30 years), the first year's payments total about $21,237, yet only about $3,141 of it retires the loan itself.
The instrument computes the fixed payment from three figures — the amount borrowed, the monthly rate, and the number of payments — then walks the entire schedule month by month to draw the table below. Nothing is estimated; the table is the actual arithmetic of your loan.
- Enter the home price and your down payment — the instrument shows the loan amount it implies.
- Set the annual interest rate your lender quoted, and pick the term.
- Read the monthly payment in the readout; total interest and total paid sit beneath it.
- Scan the amortisation table to see the balance fall year by year — and where interest stops dominating.
Worked example — the $350,000 house
Take the default sheet: a $350,000 home with $70,000 down (20%) leaves P = $280,000. At 6.5% a year, the monthly rate is i = 0.542%, and a 30-year term means n = 360 payments. Feeding those into the formula gives M = $1,769.79 a month.
Over the full term that is $637,125 paid in total — $357,125 of it interest, more than the original loan. Switch the term to 15 years and watch the payment rise but total interest fall to less than half: the table redraws instantly, and that comparison is the single most useful thing this instrument does.
Questions
Why is so much of my early payment interest?
Interest is charged on the outstanding balance, and the balance is biggest at the start. On the default schedule, roughly five of every six dollars in year one go to interest. The crossover — where principal overtakes interest inside the payment — arrives around two-thirds of the way through a 30-year term; the table shows exactly when for your numbers.
What happens if I pay extra each month?
Every extra dollar goes straight at the principal, which shrinks the balance next month's interest is computed on. The effect compounds: a steady overpayment removes years from the schedule and can cut tens of thousands from total interest. Approximate it here by comparing a shorter term.
15-year or 30-year term — what is the real trade?
The 15-year payment is higher every month, but the loan accrues interest for half as long, so total interest usually falls to well under half. The 30-year term buys a lower required payment you can voluntarily overpay in good months. Run both terms and compare the Total interest line before deciding.
Does this include property tax and insurance?
No — deliberately. Tax, homeowner's insurance, HOA dues and mortgage insurance vary by place and policy, and folding rough guesses into a precise figure would make the whole figure rough. This sheet shows principal and interest exactly; add your real escrow items on top.
Why does my lender's quote differ slightly?
Lenders may round differently, charge fees rolled into the loan, or use a 365-day accrual instead of a flat monthly rate. Small differences (cents to a few dollars) are normal; large ones mean the quote includes costs this sheet deliberately excludes — ask for the amortisation schedule and compare it against this table line by line.
References
- CFPB — Understand loan options and amortisation
- Federal Reserve — Consumer's guide to mortgage settlement costs
Read this first: This instrument shows arithmetic, not advice. Real offers add fees, taxes and terms that vary by lender and place — verify the figures against your actual paperwork before deciding anything.