Mortgage Amortization Calculator

Monthly payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
Interest this month = remaining balance × r
Principal this month = payment − interest (+ any extra principal)

• P is the amount you borrow, not the purchase price. Closing costs you pay in cash are not part of it.
• r is the annual interest rate divided by 12, written as a decimal. A 6% rate is 0.005 a month.
• n is the number of monthly payments: the term in years times 12.
• Extra principal is added on top of the regular payment and goes straight to the balance. The required payment stays the same, so the loan simply ends sooner.

The result is principal and interest (P&I) only. Your lender may also collect property taxes and insurance through escrow, and you may owe HOA dues. Those do not change the amortization schedule, but they do count in your monthly cost, your cash flow and a lender's debt service coverage calculation.

The calculator is pre-filled with a $300,000 rental property loan at 6.75% for 30 years, starting Jan 2027, with $200 a month of extra principal.

1. Monthly P&I: $300,000 over 360 payments at 6.75% works out to $1,945.79.
2. First payment (Feb 2027): interest is $300,000 × 6.75% ÷ 12 = $1,687.50. The rest of the regular payment, $258.29, plus the $200 extra, cuts the balance by $458.29.
3. Year one, with the extra payments: you pay $20,077 in interest and $5,673 in principal, ending the year owing $294,327.
4. Without extra payments, the loan would run 360 months, pay off in Jan 2057 and cost $400,486 in interest.
5. With $200 extra each month, it pays off in Jan 2050 after 276 payments. Total interest is $290,558, saving $109,928 and 84 months.

There is no single right answer. Paying extra principal earns you a guaranteed return equal to your interest rate, because every dollar of principal you retire stops costing interest. It also lowers your balance, which can make it easier to refinance or sell.

The trade-offs to weigh:

• Liquidity. Money paid into the loan is hard to get back without selling or refinancing. Many landlords build cash reserves for vacancies and repairs before they prepay.
• Other uses for the cash. The same money could fund improvements that raise rent, a down payment on another property, or other investments. Whether those beat your loan rate depends on returns that are not guaranteed.
• Taxes. Interest on a rental mortgage is generally a deductible rental expense, so paying it down faster reduces a deduction. Your after-tax cost of the loan depends on your situation.
• Prepayment terms. Some investment property loans carry prepayment penalties. Read your note before you send extra principal.

• Budgeting for P&I only. Taxes, insurance and HOA dues can add a large amount to the real monthly cost.
• Assuming the first years build much equity. Early payments are mostly interest, so the balance falls slowly at first.
• Deducting the whole mortgage payment as a rental expense. Only the interest is a deductible expense; principal is not.
• Sending extra money without marking it as principal. Ask your servicer how to apply it, or it may be held as an early payment.
• Prepaying while you have no cash reserves for the property.
• Using the loan term instead of the amortization period on a loan with a balloon payment. Check which one sets your payment.

For a rental, the split between interest and principal matters at tax time. IRS Publication 527 says you can deduct mortgage interest you pay on your rental property. Principal is different: you can't deduct your mortgage principal payments as an expense, and you recover the cost of the building through depreciation instead. The rules have exceptions, such as refinance proceeds used for non-rental purposes, so confirm the details for your situation with a tax professional.

Your lender's year-end statement is the record to use, but the yearly summary above is a quick way to estimate interest for budgeting. The rental property accounting guide explains how mortgage interest fits with your other expense categories. To see whether the property covers this payment, run it through the DSCR calculator.

Why does so little of my early payment go to principal?

Interest each month is the remaining balance times the monthly rate. At the start the balance is at its highest, so interest takes most of the payment. As the balance falls, the interest portion shrinks and more of the same payment goes to principal.

Does this payment include taxes and insurance?

No. The calculator shows principal and interest only. Property taxes, insurance and any HOA dues are separate costs, whether you pay them through an escrow account or directly. Include them when you work out cash flow or a lender's debt service coverage ratio.

Is mortgage interest on a rental property tax deductible?

IRS Publication 527 says you can deduct mortgage interest you pay on your rental property. Principal payments are not deducted as an expense; you recover the cost of the building through depreciation instead. There are exceptions, for example when refinanced loan proceeds are used for non-rental purposes, so confirm your situation with a tax professional.

Should I make extra principal payments on a rental mortgage?

It is a trade-off. Extra principal saves interest at your loan's rate with no market risk and reduces the balance faster. The same cash could instead go to reserves, repairs that raise rent, or another investment that may earn more. Check your loan documents for any prepayment penalty first.

• DSCR Calculator

  Debt service coverage the way lenders compute it: NOI method and rent ÷ PITIA.

• Cash-on-Cash Return Calculator

  Annual pre-tax cash flow ÷ the cash you actually put into the deal.

• Rental Property Calculator

  Monthly cash flow, cap rate and cash-on-cash return, counting rehab and holding costs.

• BRRRR Calculator

  Cash left in the deal after the refinance, including holding costs during the rehab.

See all landlord and investor calculators

• Rental Property Accounting: Bookkeeping Basics for Landlords