What is an amortization schedule?

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What is an Amortization Schedule?

An amortization schedule is a table detailing each periodic payment on a loan (typically a mortgage), as generated by an amortization calculator. While a portion of every payment is applied towards both the interest and the Principal balance of the loan, the exact amount applied to principal each time varies (with the remainder going to interest).

An amortization schedule reveals the specific dollar amount put towards interest, as well as the specific put towards the Principal balance, with each payment. Initially, a large portion of each payment is devoted to interest. As the loan matures, larger portions go towards paying down the principal. Many kinds of amortization exist, including Straight line, Declining balance, Annuity, Bullet, & Negative Amortization.

Amortization schedules run in chronological order. The first payment is assumed to take place one full payment period after the loan was taken out, not on the first day of the loan. The last payment completely pays off the remainder of the loan. Often, the last payment will be a slightly different amount than all earlier payments. In addition to breaking down each payment into interest and principal portions, an amortization schedule also reveals interest-paid-to-date, principal-paid-to-date, and the remaining principal balance on each payment date.