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July 22, 2015

Getting Down to Brass Tacks: The Amortization Schedule

Homeownership
Amortization Schedule Chart

You've decided to become a homeowner and are trying to make sense of many new and important terms, such as amortization. What exactly is amortization, what is an amortization schedule, and why does it matter?

For the mathematicians, amortization =

Amortization Equation

If this equation leaves you puzzled, let's look at amortization a different way.

Shortly after you complete your loan application, your lender will provide you with your Truth in Lending disclosure. This document includes the amortization schedule for your new home. This is an important table that details the amount of principal and interest you'll pay each month, ultimately providing you with the true cost of your home over the life of the loan.

Following is an example for better perspective:

The home you're buying is $150,000 and you plan on a 10% down payment, resulting in a loan amount of $135,000. You're securing a 30-year fixed-rate mortgage at 4.5% interest with a monthly mortgage payment of $684.03 (not including taxes and insurance).

Following are highlights from the full amortization schedule on your loan, illustrating how amortization works and how your money is being allocated every single month.

DateInterestPrincipal Balance
Month 1 $506.25 $177.78 $134,822.22
Month 24 $490.27 $193.76 $130,544.24
Month 48 $472.06 $211.97 $125,669.68
Month 72 $452.13 $231.89 $120,336.96
Month 96 $430.34 $253.69 $114,503.01
Month 180 $335.31 $348.72 $89,067.12
Month 360 $2.56 $681.47 $0
Assuming that you stayed in your home for 30 years, you would pay over $246,249 in principal and interest over the life of the loan. To illustrate the power of interest rates, on this same loan with a 7% interest rate, you would pay $323,337 in principal and interest.

Sample Amortization Table

Loan Amount $135,000
Interest Rate 4.50%
Years 30

PeriodPaymentInterestPrincipleBalance
1 $684.03 $506.25 $177.78 $134,822.22
2 $684.03 $505.58 $178.44 $134,643.78
3 $684.03 $504.91 $179.11 $134,464.67
4 $684.03 $504.24 $179.78 $134,284.89
5 $684.03 $503.57 $180.46 $134,104.43
6 $684.03 $502.89 $181.13 $133,923.30
7 $684.03 $502.21 $181.81 $133,741.49
8 $684.03 $501.53 $182.49 $133,558.99
9 $684.03 $500.85 $183.18 $133,375.81
10 $684.03 $500.16 $183.87 $133,191.95
11 $684.03 $499.47 $184.56 $133,007.39
12 $684.03 $498.78 $185.25 $132,822.14
13 $684.03 $498.08 $185.94 $132,636.20
14 $684.03 $497.39 $186.64 $132,449.56
15 $684.03 $496.69 $187.34 $132,262.22
16 $684.03 $495.98 $188.04 $132,074.18
17 $684.03 $495.28 $188.75 $131,885.43
18 $684.03 $494.57 $189.45 $131,695.98
19 $684.03 $493.86 $190.17 $131,505.81
20 $684.03 $493.15 $190.88 $131,314.94
21 $684.03 $492.43 $191.59 $131,123.34
22 $684.03 $491.71 $192.31 $130,931.03
23 $684.03 $490.99 $193.03 $130,738.00
24 $684.03 $490.27 $193.76 $130,544.24
25 $684.03 $489.54 $194.48 $130,349.75
26 $684.03 $488.81 $195.21 $130,154.54
27 $684.03 $488.08 $195.95 $129,958.59
28 $684.03 $487.34 $196.68 $129,761.91
29 $684.03 $486.61 $197.42 $129,564.50
30 $684.03 $485.87 $198.16 $129,366.34
31 $684.03 $485.12 $198.90 $129,167.44
32 $684.03 $484.38 $199.65 $128,967.79
33 $684.03 $483.63 $200.40 $128,767.39
34 $684.03 $482.88 $201.15 $128,566.25
35 $684.03 $482.12 $201.90 $128,364.34
36 $684.03 $481.37 $202.66 $128,161.68
37 $684.03 $480.61 $203.42 $127,958.27
38 $684.03 $479.84 $204.18 $127,754.08
39 $684.03 $479.08 $204.95 $127,549.14
40 $684.03 $478.31 $205.72 $127,343.42
41 $684.03 $477.54 $206.49 $127,136.93
42 $684.03 $476.76 $207.26 $126,929.67
43 $684.03 $475.99 $208.04 $126,721.63
44 $684.03 $475.21 $208.82 $126,512.81
45 $684.03 $474.42 $209.60 $126,303.21
46 $684.03 $473.64 $210.39 $126,092.82
47 $684.03 $472.85 $211.18 $125,881.65
48 $684.03 $472.06 $211.97 $125,669.68
49 $684.03 $471.26 $212.76 $125,456.91
50 $684.03 $470.46 $213.56 $125,243.35
51 $684.03 $469.66 $214.36 $125,028.99
52 $684.03 $468.86 $215.17 $124,813.82
53 $684.03 $468.05 $215.97 $124,597.85
54 $684.03 $467.24 $216.78 $124,381.07
55 $684.03 $466.43 $217.60 $124,163.47
56 $684.03 $465.61 $218.41 $123,945.06
57 $684.03 $464.79 $219.23 $123,725.83
58 $684.03 $463.97 $220.05 $123,505.77
59 $684.03 $463.15 $220.88 $123,284.89
60 $684.03 $462.32 $221.71 $123,063.19
61 $684.03 $461.49 $222.54 $122,840.65
62 $684.03 $460.65 $223.37 $122,617.28
63 $684.03 $459.81 $224.21 $122,393.07
64 $684.03 $458.97 $225.05 $122,168.02
65 $684.03 $458.13 $225.90 $121,942.12
66 $684.03 $457.28 $226.74 $121,715.38
67 $684.03 $456.43 $227.59 $121,487.79
68 $684.03 $455.58 $228.45 $121,259.34
69 $684.03 $454.72 $229.30 $121,030.04
70 $684.03 $453.86 $230.16 $120,799.87
71 $684.03 $453.00 $231.03 $120,568.85
72 $684.03 $452.13 $231.89 $120,336.96
73 $684.03 $451.26 $232.76 $120,104.20
74 $684.03 $450.39 $233.63 $119,870.56
75 $684.03 $449.51 $234.51 $119,636.05
76 $684.03 $448.64 $235.39 $119,400.66
77 $684.03 $447.75 $236.27 $119,164.39
78 $684.03 $446.87 $237.16 $118,927.23
79 $684.03 $445.98 $238.05 $118,689.18
80 $684.03 $445.08 $238.94 $118,450.24
81 $684.03 $444.19 $239.84 $118,210.40
82 $684.03 $443.29 $240.74 $117,969.67
83 $684.03 $442.39 $241.64 $117,728.03
84 $684.03 $441.48 $242.55 $117,485.48
85 $684.03 $440.57 $243.45 $117,242.03
86 $684.03 $439.66 $244.37 $116,997.66
87 $684.03 $438.74 $245.28 $116,752.38
88 $684.03 $437.82 $246.20 $116,506.17
89 $684.03 $436.90 $247.13 $116,259.05
90 $684.03 $435.97 $248.05 $116,010.99
91 $684.03 $435.04 $248.98 $115,762.01
92 $684.03 $434.11 $249.92 $115,512.09
93 $684.03 $433.17 $250.85 $115,261.24
94 $684.03 $432.23 $251.80 $115,009.44
95 $684.03 $431.29 $252.74 $114,756.70
96 $684.03 $430.34 $253.69 $114,503.01
97 $684.03 $429.39 $254.64 $114,248.37
98 $684.03 $428.43 $255.59 $113,992.78
99 $684.03 $427.47 $256.55 $113,736.23
100 $684.03 $426.51 $257.51 $113,478.71
101 $684.03 $425.55 $258.48 $113,220.23
102 $684.03 $424.58 $259.45 $112,960.79
103 $684.03 $423.60 $260.42 $112,700.36
104 $684.03 $422.63 $261.40 $112,438.96
105 $684.03 $421.65 $262.38 $112,176.59
106 $684.03 $420.66 $263.36 $111,913.22
107 $684.03 $419.67 $264.35 $111,648.87
108 $684.03 $418.68 $265.34 $111,383.53
109 $684.03 $417.69 $266.34 $111,117.19
110 $684.03 $416.69 $267.34 $110,849.86
111 $684.03 $415.69 $268.34 $110,581.52
112 $684.03 $414.68 $269.34 $110,312.17
113 $684.03 $413.67 $270.35 $110,041.82
114 $684.03 $412.66 $271.37 $109,770.45
115 $684.03 $411.64 $272.39 $109,498.07
116 $684.03 $410.62 $273.41 $109,224.66
117 $684.03 $409.59 $274.43 $108,950.23
118 $684.03 $408.56 $275.46 $108,674.76
119 $684.03 $407.53 $276.49 $108,398.27
120 $684.03 $406.49 $277.53 $108,120.74
121 $684.03 $405.45 $278.57 $107,842.16
122 $684.03 $404.41 $279.62 $107,562.55
123 $684.03 $403.36 $280.67 $107,281.88
124 $684.03 $402.31 $281.72 $107,000.16
125 $684.03 $401.25 $282.77 $106,717.39
126 $684.03 $400.19 $283.83 $106,433.55
127 $684.03 $399.13 $284.90 $106,148.65
128 $684.03 $398.06 $285.97 $105,862.69
129 $684.03 $396.99 $287.04 $105,575.65
130 $684.03 $395.91 $288.12 $105,287.53
131 $684.03 $394.83 $289.20 $104,998.33
132 $684.03 $393.74 $290.28 $104,708.05
133 $684.03 $392.66 $291.37 $104,416.68
134 $684.03 $391.56 $292.46 $104,124.22
135 $684.03 $390.47 $293.56 $103,830.66
136 $684.03 $389.36 $294.66 $103,536.00
137 $684.03 $388.26 $295.77 $103,240.24
138 $684.03 $387.15 $296.87 $102,943.36
139 $684.03 $386.04 $297.99 $102,645.37
140 $684.03 $384.92 $299.11 $102,346.27
141 $684.03 $383.80 $300.23 $102,046.04
142 $684.03 $382.67 $301.35 $101,744.69
143 $684.03 $381.54 $302.48 $101,442.21
144 $684.03 $380.41 $303.62 $101,138.59
145 $684.03 $379.27 $304.76 $100,833.83
146 $684.03 $378.13 $305.90 $100,527.94
147 $684.03 $376.98 $307.05 $100,220.89
148 $684.03 $375.83 $308.20 $99,912.69
149 $684.03 $374.67 $309.35 $99,603.34
150 $684.03 $373.51 $310.51 $99,292.83
151 $684.03 $372.35 $311.68 $98,981.15
152 $684.03 $371.18 $312.85 $98,668.31
153 $684.03 $370.01 $314.02 $98,354.29
154 $684.03 $368.83 $315.20 $98,039.09
155 $684.03 $367.65 $316.38 $97,722.71
156 $684.03 $366.46 $317.57 $97,405.15
157 $684.03 $365.27 $318.76 $97,086.39
158 $684.03 $364.07 $319.95 $96,766.44
159 $684.03 $362.87 $321.15 $96,445.29
160 $684.03 $361.67 $322.36 $96,122.93
161 $684.03 $360.46 $323.56 $95,799.37
162 $684.03 $359.25 $324.78 $95,474.59
163 $684.03 $358.03 $326.00 $95,148.60
164 $684.03 $356.81 $327.22 $94,821.38
165 $684.03 $355.58 $328.45 $94,492.93
166 $684.03 $354.35 $329.68 $94,163.26
167 $684.03 $353.11 $330.91 $93,832.34
168 $684.03 $351.87 $332.15 $93,500.19
169 $684.03 $350.63 $333.40 $93,166.79
170 $684.03 $349.38 $334.65 $92,832.14
171 $684.03 $348.12 $335.90 $92,496.24
172 $684.03 $346.86 $337.16 $92,159.07
173 $684.03 $345.60 $338.43 $91,820.64
174 $684.03 $344.33 $339.70 $91,480.94
175 $684.03 $343.05 $340.97 $91,139.97
176 $684.03 $341.77 $342.25 $90,797.72
177 $684.03 $340.49 $343.53 $90,454.19
178 $684.03 $339.20 $344.82 $90,109.37
179 $684.03 $337.91 $346.12 $89,763.25
180 $684.03 $336.61 $347.41 $89,415.84
181 $684.03 $335.31 $348.72 $89,067.12
182 $684.03 $334.00 $350.02 $88,717.10
183 $684.03 $332.69 $351.34 $88,365.76
184 $684.03 $331.37 $352.65 $88,013.11
185 $684.03 $330.05 $353.98 $87,659.13
186 $684.03 $328.72 $355.30 $87,303.83
187 $684.03 $327.39 $356.64 $86,947.20
188 $684.03 $326.05 $357.97 $86,589.22
189 $684.03 $324.71 $359.32 $86,229.91
190 $684.03 $323.36 $360.66 $85,869.24
191 $684.03 $322.01 $362.02 $85,507.23
192 $684.03 $320.65 $363.37 $85,143.85
193 $684.03 $319.29 $364.74 $84,779.12
194 $684.03 $317.92 $366.10 $84,413.02
195 $684.03 $316.55 $367.48 $84,045.54
196 $684.03 $315.17 $368.85 $83,676.68
197 $684.03 $313.79 $370.24 $83,306.45
198 $684.03 $312.40 $371.63 $82,934.82
199 $684.03 $311.01 $373.02 $82,561.80
200 $684.03 $309.61 $374.42 $82,187.38
201 $684.03 $308.20 $375.82 $81,811.56
202 $684.03 $306.79 $377.23 $81,434.33
203 $684.03 $305.38 $378.65 $81,055.68
204 $684.03 $303.96 $380.07 $80,675.62
205 $684.03 $302.53 $381.49 $80,294.12
206 $684.03 $301.10 $382.92 $79,911.20
207 $684.03 $299.67 $384.36 $79,526.84
208 $684.03 $298.23 $385.80 $79,141.04
209 $684.03 $296.78 $387.25 $78,753.80
210 $684.03 $295.33 $388.70 $78,365.10
211 $684.03 $293.87 $390.16 $77,974.94
212 $684.03 $292.41 $391.62 $77,583.32
213 $684.03 $290.94 $393.09 $77,190.24
214 $684.03 $289.46 $394.56 $76,795.68
215 $684.03 $287.98 $396.04 $76,399.63
216 $684.03 $286.50 $397.53 $76,002.11
217 $684.03 $285.01 $399.02 $75,603.09
218 $684.03 $283.51 $400.51 $75,202.58
219 $684.03 $282.01 $402.02 $74,800.56
220 $684.03 $280.50 $403.52 $74,397.04
221 $684.03 $278.99 $405.04 $73,992.00
222 $684.03 $277.47 $406.56 $73,585.45
223 $684.03 $275.95 $408.08 $73,177.37
224 $684.03 $274.42 $409.61 $72,767.76
225 $684.03 $272.88 $411.15 $72,356.61
226 $684.03 $271.34 $412.69 $71,943.92
227 $684.03 $269.79 $414.24 $71,529.69
228 $684.03 $268.24 $415.79 $71,113.90
229 $684.03 $266.68 $417.35 $70,696.55
230 $684.03 $265.11 $418.91 $70,277.64
231 $684.03 $263.54 $420.48 $69,857.15
232 $684.03 $261.96 $422.06 $69,435.09
233 $684.03 $260.38 $423.64 $69,011.45
234 $684.03 $258.79 $425.23 $68,586.22
235 $684.03 $257.20 $426.83 $68,159.39
236 $684.03 $255.60 $428.43 $67,730.96
237 $684.03 $253.99 $430.03 $67,300.93
238 $684.03 $252.38 $431.65 $66,869.28
239 $684.03 $250.76 $433.27 $66,436.02
240 $684.03 $249.14 $434.89 $66,001.13
241 $684.03 $247.50 $436.52 $65,564.61
242 $684.03 $245.87 $438.16 $65,126.45
243 $684.03 $244.22 $439.80 $64,686.65
244 $684.03 $242.57 $441.45 $64,245.20
245 $684.03 $240.92 $443.11 $63,802.09
246 $684.03 $239.26 $444.77 $63,357.32
247 $684.03 $237.59 $446.44 $62,910.89
248 $684.03 $235.92 $448.11 $62,462.78
249 $684.03 $234.24 $449.79 $62,012.99
250 $684.03 $232.55 $451.48 $61,561.51
251 $684.03 $230.86 $453.17 $61,108.34
252 $684.03 $229.16 $454.87 $60,653.47
253 $684.03 $227.45 $456.57 $60,196.90
254 $684.03 $225.74 $458.29 $59,738.61
255 $684.03 $224.02 $460.01 $59,278.61
256 $684.03 $222.29 $461.73 $58,816.88
257 $684.03 $220.56 $463.46 $58,353.41
258 $684.03 $218.83 $465.20 $57,888.21
259 $684.03 $217.08 $466.94 $57,421.27
260 $684.03 $215.33 $468.70 $56,952.58
261 $684.03 $213.57 $470.45 $56,482.12
262 $684.03 $211.81 $472.22 $56,009.90
263 $684.03 $210.04 $473.99 $55,535.92
264 $684.03 $208.26 $475.77 $55,060.15
265 $684.03 $206.48 $477.55 $54,582.60
266 $684.03 $204.68 $479.34 $54,103.26
267 $684.03 $202.89 $481.14 $53,622.12
268 $684.03 $201.08 $482.94 $53,139.18
269 $684.03 $199.27 $484.75 $52,654.43
270 $684.03 $197.45 $486.57 $52,167.86
271 $684.03 $195.63 $488.40 $51,679.46
272 $684.03 $193.80 $490.23 $51,189.23
273 $684.03 $191.96 $492.07 $50,697.17
274 $684.03 $190.11 $493.91 $50,203.26
275 $684.03 $188.26 $495.76 $49,707.49
276 $684.03 $186.40 $497.62 $49,209.87
277 $684.03 $184.54 $499.49 $48,710.38
278 $684.03 $182.66 $501.36 $48,209.02
279 $684.03 $180.78 $503.24 $47,705.78
280 $684.03 $178.90 $505.13 $47,200.65
281 $684.03 $177.00 $507.02 $46,693.63
282 $684.03 $175.10 $508.92 $46,184.71
283 $684.03 $173.19 $510.83 $45,673.87
284 $684.03 $171.28 $512.75 $45,161.13
285 $684.03 $169.35 $514.67 $44,646.46
286 $684.03 $167.42 $516.60 $44,129.85
287 $684.03 $165.49 $518.54 $43,611.32
288 $684.03 $163.54 $520.48 $43,090.83
289 $684.03 $161.59 $522.43 $42,568.40
290 $684.03 $159.63 $524.39 $42,044.01
291 $684.03 $157.67 $526.36 $41,517.64
292 $684.03 $155.69 $528.33 $40,989.31
293 $684.03 $153.71 $530.32 $40,459.00
294 $684.03 $151.72 $532.30 $39,926.69
295 $684.03 $149.73 $534.30 $39,392.39
296 $684.03 $147.72 $536.30 $38,856.09
297 $684.03 $145.71 $538.31 $38,317.77
298 $684.03 $143.69 $540.33 $37,777.44
299 $684.03 $141.67 $542.36 $37,235.08
300 $684.03 $139.63 $544.39 $36,690.69
301 $684.03 $137.59 $546.44 $36,144.25
302 $684.03 $135.54 $548.48 $35,595.77
303 $684.03 $133.48 $550.54 $35,045.23
304 $684.03 $131.42 $552.61 $34,492.62
305 $684.03 $129.35 $554.68 $33,937.94
306 $684.03 $127.27 $556.76 $33,381.18
307 $684.03 $125.18 $558.85 $32,822.34
308 $684.03 $123.08 $560.94 $32,261.40
309 $684.03 $120.98 $563.04 $31,698.35
310 $684.03 $118.87 $565.16 $31,133.20
311 $684.03 $116.75 $567.28 $30,565.92
312 $684.03 $114.62 $569.40 $29,996.52
313 $684.03 $112.49 $571.54 $29,424.98
314 $684.03 $110.34 $573.68 $28,851.30
315 $684.03 $108.19 $575.83 $28,275.46
316 $684.03 $106.03 $577.99 $27,697.47
317 $684.03 $103.87 $580.16 $27,117.31
318 $684.03 $101.69 $582.34 $26,534.98
319 $684.03 $99.51 $584.52 $25,950.46
320 $684.03 $97.31 $586.71 $25,363.75
321 $684.03 $95.11 $588.91 $24,774.84
322 $684.03 $92.91 $591.12 $24,183.72
323 $684.03 $90.69 $593.34 $23,590.38
324 $684.03 $88.46 $595.56 $22,994.82
325 $684.03 $86.23 $597.79 $22,397.03
326 $684.03 $83.99 $600.04 $21,796.99
327 $684.03 $81.74 $602.29 $21,194.70
328 $684.03 $79.48 $604.55 $20,590.16
329 $684.03 $77.21 $606.81 $19,983.35
330 $684.03 $74.94 $609.09 $19,374.26
331 $684.03 $72.65 $611.37 $18,762.89
332 $684.03 $70.36 $613.66 $18,149.22
333 $684.03 $68.06 $615.97 $17,533.26
334 $684.03 $65.75 $618.28 $16,914.98
335 $684.03 $63.43 $620.59 $16,294.39
336 $684.03 $61.10 $622.92 $15,671.47
337 $684.03 $58.77 $625.26 $15,046.21
338 $684.03 $56.42 $627.60 $14,418.61
339 $684.03 $54.07 $629.96 $13,788.65
340 $684.03 $51.71 $632.32 $13,156.33
341 $684.03 $49.34 $634.69 $12,521.64
342 $684.03 $46.96 $637.07 $11,884.58
343 $684.03 $44.57 $639.46 $11,245.12
344 $684.03 $42.17 $641.86 $10,603.26
345 $684.03 $39.76 $644.26 $9,959.00
346 $684.03 $37.35 $646.68 $9,312.32
347 $684.03 $34.92 $649.10 $8,663.22
348 $684.03 $32.49 $651.54 $8,011.68
349 $684.03 $30.04 $653.98 $7,357.70
350 $684.03 $27.59 $656.43 $6,701.26
351 $684.03 $25.13 $658.90 $6,042.37
352 $684.03 $22.66 $661.37 $5,381.00
353 $684.03 $20.18 $663.85 $4,717.15
354 $684.03 $17.69 $666.34 $4,050.82
355 $684.03 $15.19 $668.83 $3,381.98
356 $684.03 $12.68 $671.34 $2,710.64
357 $684.03 $10.16 $673.86 $2,036.78
358 $684.03 $7.64 $676.39 $1,360.39
359 $684.03 $5.10 $678.92 $681.47
360 $684.03 $2.56 $681.47 $0.00

As you can see, in the beginning years of homeownership, the largest portion of your payment is applied to interest versus principal and you're building equity at a slower pace. As the loan progresses, you see more of your payment applied to your principal, paying down your balance at a faster pace. Why? Because the interest you are charged each month is calculated using your outstanding balance, which gets smaller with every payment you make.

The real beauty of amortization lies in the consistency it provides to homeowners with fixed-rate mortgages. Your monthly payments are divided into equal amounts over the duration of the loan – that's 360 payments with a 30 year term – allowing you to budget and plan your finances for the long term.

Read more blogs in our get down to brass tacks series about other important topics and visit My Home by Freddie MacSM where we discuss it all.

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