How to Read an Amortization Schedule

What an amortization schedule shows

An amortization schedule is a row-by-row map of a loan. Each row is one payment period (usually a month) and shows the payment number, the amount of that payment applied to principal, the amount applied to interest, and the remaining balance.

At the end of the table, the balance reaches zero — that is when the loan is paid off.

Reading a single row

Take the first row of a $250,000 loan at 6% for 30 years. The payment is $1,498.88. Interest for the month is $1,250.00, principal is $248.88, and the new balance is $249,751.12.

The interest is high because the balance is high. Every month the interest shrinks and the principal portion grows.

The big picture: total interest

Add up the interest column and you get the true cost of borrowing — for this loan, about $289,596 over 30 years, nearly equal to the loan itself.

This is why the schedule is worth studying: it makes visible how expensive a long-term loan really is.

What extra payments do

If you add an extra payment each month, that full amount goes to principal. The balance falls faster, so less interest accrues, and the loan ends early.

On a $250,000 loan at 6%, a $100 monthly extra payment shortens the term by several years and saves tens of thousands in interest. Generate the schedule with and without the extra payment to compare exactly.

Frequently asked questions