Mortgage guides
Why does my mortgage balance fall so slowly at first? | Mortgage 101
Sources and calculations checked:
No calculations needed: see why less debt means less interest and more of the same payment goes toward principal.
From early to later payments: the same amount, a different split
1. At the start
What you still owe
The same payment each timePrincipal and interest only
You still owe a lot, so borrowing costs more. A smaller part of this payment reduces your debt.
2. As you repay
What you still owe
The same payment each timePrincipal and interest only
Each principal payment reduces the debt. Next time, less goes to interest and more pays down the balance.
3. Later in repayment
What you still owe
The same payment each timePrincipal and interest only
As the debt gets smaller, interest gets smaller too. More of the same payment now reduces what you owe.
Illustrations show the direction of change, not actual amounts or proportions.
Remember just one thing
The more money you still owe, the more it costs to borrow it.
At the start, your debt is large. More of each payment covers interest, and a smaller part reduces the debt.
Each principal payment leaves you owing a little less. Next time, interest is a little smaller. More of the same payment can pay back what you borrowed. Step by step, the debt gets smaller.
This illustration describes a fully amortizing fixed-rate mortgage with on-time payments. The principal-and-interest payment stays the same; taxes, insurance, and other costs are separate.
CFPB’s explanation of mortgage repayment
Want to understand your own payment?
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