How to create a mortgage amortization schedule
Assuming you know the mortgage amount, to calculate the payment and create a schedule, leave all values set to "0" and follow these steps:
- Enter the Mortgage Loan Amount.
- Enter the expected Number of Payments.
- Enter the anticipated Annual Interest Rate.
- Set Payment Amount (P & I only) to 0 (the unknown).
- Click Amortization Schedule
That's it! That's all you need to do.
But there's a lot more you can do with this mortgage calculator.
NOTICE - Always enter (and reenter) a 0 if you want a value calculated.
Since the calculator does not recalculate the payment when the mortgage amount changes (for example), users can create an amortization schedule with whatever payment amount they desire.
What is Mortgage Amortization?
We learn from the financial dictionary that "amortization is the gradual repayment of a debt over a period of time, such as monthly payments on a mortgage loan or credit card balance. To amortize a mortgage, your payments must be large enough to pay not only the interest that has accrued but also to reduce the principal you owe."
An amortization schedule is a report showing the loan payments paid or due. The report provides details about how much of the payment the lender is allocating to principal and interest. The payment date due and the balance are frequently included in the schedule as well.
If the amount paid on the mortgage is not large enough to cover the interest due, then the mortgage balance will be increasing due to the unpaid interest. When a loan has an increasing balance, it is known as negative amortization. You can read more about it here. This calculator supports negative amortization.
Options that impact the amortization schedule
Found on the "Set Dates or XPmts" tab:
- Amortization Method - leave this setting set to "normal" unless you have a specific reason for setting it otherwise. For a complete explanation of these options, see Nine Loan Amortization Methods.
- Days-Per-Year - 360/364/365 days per year option. This setting only impacts interest calculations when you set compounding frequency to a day based frequency (daily, exact/simple or continuous) or when there are odd days caused by an initial short or long period.
- Fiscal Year-End for Report Totals - this setting establishes after what month the calculator shows year-end and running totals. This option is to accommodate businesses with fiscal year ends that do not coincide with the calendar year-end.
- Rounding Options - due to interest and payment rounding with each payment (for example, payment or interest might calculate to 345.0457, but a schedule will need to round the value to 345.05), almost all loan schedules require a final rounding adjustment to bring the balance to "0". A footnote on the payment schedule informs you of the rounding amount.
Hopefully, you'll find this to be a full-featured mortgage calculator. If something is not clear, you may leave your question in the comments below