What is an Amortization Schedule?

An amortization schedule is a complete table of periodic loan payments showing the amount of principal and interest that comprise each payment until the loan is paid off at the end of its term.

Key Components

• Payment Number: The sequential number of each payment.
• Payment Date: The date each payment is due.
• Payment Amount: The total principal and interest payment.
• Principal: The portion of the payment that reduces your loan balance.
• Interest: The portion of the payment that is the cost of borrowing.
• MIP: The monthly mortgage insurance premium for FHA loans.
• Total Payment: The combined principal, interest, and MIP payment.
• Remaining Balance: The loan balance after each payment.

How Amortization Works

With a fixed-rate mortgage, your total principal and interest payment remains the same each month, but the portion going to principal versus interest changes over time:

• Early in the loan: Most of your payment goes toward interest.
• Later in the loan: More of your payment goes toward principal.

This happens because interest is calculated based on the remaining loan balance. As you pay down the principal, less interest accrues, allowing more of each payment to reduce the principal.

FHA MIP Considerations

For FHA loans with less than 10% down payment, mortgage insurance premiums (MIP) are required for the life of the loan. For loans with 10% or more down payment, MIP can be removed after 11 years.

This amortization schedule includes MIP in the total payment calculation, giving you a complete picture of your monthly obligation.