How to use the amortization schedule calculator
Enter the loan as it stands today, or as a lender quoted it, then play with different extra payments to see how the payoff date moves. The defaults describe a $2,000,000 apartment loan, so you can see a full schedule before you enter your own numbers.
- Loan amount ($2,000,000 default): the principal borrowed, or the current balance if you’re partway through a loan.
- Interest rate (6.5% default): the annual fixed rate on the note.
- Amortization (30 years default): the number of years over which the payment is set to pay the loan to $0.
- Extra monthly principal ($0 default): an added amount paid with every monthly payment that goes straight to the balance.
What the results mean
The calculator runs the loan payment by payment and rolls the months up into a yearly table.
- Monthly payment: the scheduled principal and interest, before any extra principal.
- Total interest: every dollar of interest paid until the balance reaches $0.
- Payoff time with extra payments: how many years and months the loan actually runs once extra principal is added.
- Interest saved: total interest on the regular schedule minus total interest with extra payments.
- Year-by-year schedule: for each year, the total paid, the interest, the principal and the ending balance.
How does loan amortization work?
Amortization means paying off a loan with equal payments, where each payment covers that month’s interest first and whatever is left goes to principal. Interest is charged on the balance still owed, so early payments are mostly interest and later payments are mostly principal.
On a fixed-rate loan the payment never changes, but the mix inside it does. As the balance falls, less of each payment goes to interest and more goes to principal. That’s why interest is called front-loaded: on a 30-year loan you spend years paying mostly interest before principal catches up.
This matters if you plan to sell or refinance. Sell in year 5 or year 10 and you haven’t paid down a fifth or a third of the loan. You’ve paid down a lot less, and the schedule shows exactly how much.
The amortization formula
The calculator uses the standard fixed-rate formulas. In the table, P is the loan amount, r is the annual rate ÷ 12, n is the amortization in months and k is the number of payments made.
| Result | Formula |
|---|---|
| Monthly payment | P × r ÷ (1 − (1 + r)^−n) |
| Interest in a month | Balance at the start of the month × r |
| Principal in a month | Payment − that month’s interest (+ any extra principal) |
| Balance after k payments | P × (1 + r)^k − payment × ((1 + r)^k − 1) ÷ r |
| Interest saved | Total interest without extra − total interest with extra |
Worked example: $2,000,000 at 6.5% over 30 years
With the default inputs, a $2,000,000 loan at 6.5% amortized over 30 years has a monthly payment of $12,641.36, or $151,696.33 a year. Over the full 30 years the borrower pays $4,550,889.77, and $2,550,889.77 of that is interest.
The first payment is $10,833.33 of interest and only $1,808.03 of principal. In year 1, $129,341.82 of the $151,696.33 paid, about 85%, is interest, and the balance falls to $1,977,645.49. By the end of year 5 the balance is $1,872,219.55, and after year 10 it’s $1,695,522.53. Ten years of payments retire only about 15% of the loan.
Principal doesn’t pass interest until payment 233, in year 20. From there the balance drops fast, and the last year’s payments are almost all principal.
| Year | Payments | Interest | Principal | Ending balance |
|---|---|---|---|---|
| 1 | $151,696.33 | $129,341.82 | $22,354.51 | $1,977,645.49 |
| 5 | $151,696.33 | $122,724.42 | $28,971.90 | $1,872,219.55 |
| 10 | $151,696.33 | $111,633.48 | $40,062.85 | $1,695,522.53 |
| 15 | $151,696.33 | $96,296.73 | $55,399.60 | $1,451,182.82 |
| 20 | $151,696.33 | $75,088.80 | $76,607.52 | $1,113,305.65 |
| 25 | $151,696.33 | $45,762.11 | $105,934.21 | $646,083.24 |
| 30 | $151,696.33 | $5,208.66 | $146,487.66 | $0 |
What $1,000 a month of extra principal does
Add $1,000 a month to the same loan and it’s paid off in 24 years and 5 months instead of 30 years, with total interest falling from $2,550,889.77 to $1,991,432.09. That’s $559,457.68 of interest saved and 67 fewer payments.
Extra money works hardest early, because every dollar of principal you retire stops accruing 6.5% for the rest of the loan. After year 1 the balance is $1,965,281.46, after year 5 it’s $1,801,545.58 and after year 10 it’s $1,527,119.37, about $168,403 below the regular schedule. The final payment, in month 293, is $8,154.83.
| $2,000,000 at 6.5%, 30-year amortization | $0 extra | $1,000 extra a month |
|---|---|---|
| Monthly outlay | $12,641.36 | $13,641.36 |
| Balance after year 1 | $1,977,645.49 | $1,965,281.46 |
| Balance after year 5 | $1,872,219.55 | $1,801,545.58 |
| Balance after year 10 | $1,695,522.53 | $1,527,119.37 |
| Payoff time | 30 years | 24 years, 5 months |
| Total interest | $2,550,889.77 | $1,991,432.09 |
| Interest saved | — | $559,457.68 |
How to read an amortization schedule
Read the schedule from the column that fits the decision in front of you. These are the questions it answers most often:
- What will I owe if I sell or refinance in year X? Read the ending balance for that year. That’s the starting point for your loan payoff, before accrued interest and any prepayment premium.
- How much equity am I building from paydown? Add up the principal column for the years you plan to hold.
- How much interest will I pay this year? The interest column for that year is the figure that shows up on your lender’s year-end statement, assuming payments were made on schedule.
- When does the loan start paying down fast? Find the year where principal passes interest.
- Is an extra payment worth it? Compare the ending balances and total interest with and without the extra amount.
25-year vs 30-year amortization on an apartment loan
A 25-year amortization costs more each month but builds equity much faster than a 30-year amortization. Multifamily lenders commonly quote 25- or 30-year schedules, and Fannie Mae’s fixed-rate multifamily term sheet lists amortization of up to 30 years.
On the same $2,000,000 at 6.5%, a 25-year schedule raises the payment by $862.78 a month and cuts total interest by $499,646.80. After 10 years you’d owe $1,550,227.19 instead of $1,695,522.53.
The trade-off is coverage. Annual debt service rises from $151,696.33 to $162,049.72, so at a 1.25x DSCR the building needs about $202,562 of NOI instead of $189,620. When NOI is tight, the longer amortization is often what makes the loan size work.
| $2,000,000 at 6.5% | 30-year amortization | 25-year amortization |
|---|---|---|
| Monthly payment | $12,641.36 | $13,504.14 |
| Annual debt service | $151,696.33 | $162,049.72 |
| Balance after year 10 | $1,695,522.53 | $1,550,227.19 |
| Total interest | $2,550,889.77 | $2,051,242.97 |
| NOI needed at 1.25x DSCR | $189,620 | $202,562 |
How an interest-only period changes the schedule
During an interest-only period the balance doesn’t move, and amortization starts later over fewer years, so the payment jumps when the period ends. On $2,000,000 at 6.5%, three years of interest-only cost $10,833.33 a month. The loan then amortizes over the remaining 27 years at $13,111.10 a month.
That structure costs $2,637,996.22 of total interest, $87,106.45 more than a straight 30-year schedule, and leaves $1,758,526.27 owed after year 10 instead of $1,695,522.53. Interest-only helps cash flow during a lease-up or renovation, but budget for the bigger payment when it ends. Our commercial mortgage calculator shows the interest-only payment and DSCR side by side.
Extra principal and prepayment penalties on commercial loans
On many commercial and agency apartment loans, extra principal counts as a prepayment and can trigger the same premium as a full payoff. Fannie Mae’s standard prepayment premium schedule, for example, applies its yield maintenance formula to the amount prepaid, not only to a full payoff.
Read your note before you send extra money. Some loan documents limit partial prepayments to certain dates or minimum amounts, and some step-down loans charge a fixed percentage of whatever you prepay. If your loan carries yield maintenance or defeasance, the interest you save can be smaller than the premium. Our guide to defeasance and yield maintenance explains how each one is priced.
Bank loans and seller-financed notes are often more flexible, and many allow extra principal at any time. With those loans, this calculator’s interest-saved figure is most likely to be real money.
Amortizing a seller-financed note
A seller-financed note amortizes exactly like a bank loan, so the schedule shows a seller how much interest income they’ll collect and how fast their principal comes back. Enter the note amount, rate and amortization, and the interest column becomes your yearly interest income.
The principal column matters for taxes. Under the installment method in IRS Publication 537, part of each principal payment is taxable gain in the year you receive it, so a faster paydown pulls gain into earlier years. The rate has a floor, too: on a note below the applicable federal rate, part of the principal can be recharacterized as interest. Many seller notes also carry a balloon, which our balloon payment and seller financing calculators handle.
Amortization vs depreciation: two different meanings
In tax language, amortization also means writing off the cost of an intangible asset over time, and that has nothing to do with paying down a loan. Section 197 intangibles, such as goodwill acquired with a business, are amortized over 15 years. A residential rental building is depreciated, not amortized, over 27.5 years under the general depreciation system.
Loan costs sit in between. IRS Publication 527 says points on a rental property loan are deducted over the term of the loan, not all at once. Our depreciation on rental property guide covers the building side.
Selling a building before the loan is paid off
Most apartment owners sell long before the schedule hits $0, and the ending balance for the sale year is what comes out of the proceeds at closing. Plug that number into our net proceeds calculator to see what you’d walk away with.
Skyline Capital Investments buys apartment buildings with 5+ units nationwide as a direct buyer. We can work around your loan’s prepayment terms, consider seller-carry terms on part of the price and work with 1031 exchange timelines. Send the address and unit count through the form on this page or call (469) 660-2977, and we typically respond within 48 hours.
