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What Is a Loan Amortization Schedule?

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What Is Amortization?

In the real estate industry, amortization refers to the way a person pays off their mortgage loan with their monthly payments. The amount of said payment will depend on a number of factors: the loan amount, the interest rate, and the length of the mortgage. These can also change if you have an adjustable interest rate.

What Is a Loan Amortization Schedule?

A loan amortization schedule is a table that shows you how much principal and interest you pay each month for the life of your loan. As time goes on, you will pay more principal and less interest in each one of your monthly payments. You can calculate this for yourself using an online loan amortization calculator.

Below, you will see an example amortization table for the first year of a $500,000 mortgage loan. This is a 30 year mortgage with a fixed interest rate of 4.5%. In the below table, you will notice that the payment price remains the same, but the principal and interest increase and decrease in opposition to one another.

Payment Date	Payment	Principal	Interest	Total Interest	Balance
Jul 2022	$2,533.43	$658.43	$1,875.00	$1,875.00	$499,341.57
Aug 2022	$2,533.43	$660.90	$1,872.53	$3,747.53	$498,680.68
Sep 2022	$2,533.43	$663.37	$1,870.05	$5,617.58	$498,017.30
Oct 2022	$2,533.43	$665.86	$1,867.56	$7,485.15	$497,351.44
Nov 2022	$2,533.43	$668.36	$1,865.07	$9,350.22	$496,683.08
Dec 2022	$2,533.43	$670.86	$1,862.56	$11,212.78	$496,012.22
Jan 2023	$2,533.43	$673.38	$1,860.05	$13,072.82	$495,338.84
Feb 2023	$2,533.43	$675.91	$1,857.52	$14,930.34	$494,662.93
Mar 2023	$2,533.43	$678.44	$1,854.99	$16,785.33	$493,984.49
Apr 2023	$2,533.43	$680.98	$1,852.44	$18,637.77	$493,303.51
May 2023	$2,533.43	$683.54	$1,849.89	$20,487.66	$492,619.97
Jun 2023	$2,533.43	$686.10	$1,847.32	$22,334.99	$491,933.87
Jul 2023	$2,533.43	$688.67	$1,844.75	$24,179.74	$491,245.19

Conclusion

A loan amortization schedule shows you what percentage you are paying toward your principal and interest each month for the life of your loan. On your loan amortization schedule, you will notice that with each monthly payment, the amount of principal you are paying increases that the amount of interest you are paying decreases, though the total amount remains the same.