GuideCalculatorDetailed Guide

How to Build a Amortization Calculator

An amortization calculator shows how loan payments are split between principal and interest over time. Essential for understanding how much equity you build and interest you pay.

What is a Amortization Calculator?

Amortization is the process of paying off debt through regular payments. Early payments are mostly interest; later payments are mostly principal. An amortization schedule shows this breakdown for every payment.

The Formula

Interest Payment = Remaining Balance × Monthly Rate
Principal Payment = Total Payment - Interest Payment
New Balance = Old Balance - Principal Payment

Code Example

JavaScript

function generateAmortizationSchedule(principal, annualRate, years) {
  const monthlyRate = annualRate / 100 / 12;
  const numPayments = years * 12;

  const payment = principal *
    (monthlyRate * Math.pow(1 + monthlyRate, numPayments)) /
    (Math.pow(1 + monthlyRate, numPayments) - 1);

  const schedule = [];
  let balance = principal;
  let totalInterest = 0;

  for (let month = 1; month <= numPayments; month++) {
    const interestPayment = balance * monthlyRate;
    const principalPayment = payment - interestPayment;
    balance -= principalPayment;
    totalInterest += interestPayment;

    schedule.push({
      month,
      payment: payment,
      principal: principalPayment,
      interest: interestPayment,
      totalInterest: totalInterest,
      balance: Math.max(0, balance)
    });
  }

  return { schedule, monthlyPayment: payment, totalInterest };
}