How much Principal are you really paying towards your mortgage versus Interest?

This is a real-life scenario, using the actual Average Price for a home as of May 2017. We are using a 25 year Amortization for a Mortgage with an Interest Rate of 2.8% & a 5 Year Term.

Mortgage Payment Information

  • Purchase Price $420,207
  • Down Payment $84,041.40 (20%)
  • Amount Financed $336,165.60
  • Monthly Payment $1,556.59 (Principal & Interest ONLY)

Residential (or Property) Taxes are a little harder to figure out... the average residential tax rate seems to be around $14 per year for every $1,000 of your property's assessed value.

Let's say that your property's assessed value is 85% of what you actually paid for it - $357,175.95. This would mean that your yearly residential taxes will be around $5,000.46.
This could add $416.71 to your monthly payment.

  • Total Monthly Payment would be $1,973.30 (including Taxes)

Calculations and Amortization - Year 1

How much will I pay towards my Principal in the first year of my mortgage?

Amortization For Monthly Payment: $1,556.59 over 25 years

Month Interest Paid Principal Paid Remaing Balance
1 $779.85 $776.74 $335,388.86
2 $778.05 $778.54 $334,610.31
3 $776.24 $780.35 $333,829.96
4 $774.43 $782.16 $333,047.80
5 $772.62 $783.98 $332,263.83
6 $770.80 $785.79 $331,478.03
7 $768.98 $787.62 $330,690.42
8 $767.15 $789.44 $329,900.97
9 $765.32 $791.28 $329,109.70
10 $763.48 $793.11 $328,316.59
11 $761.64 $794.95 $327,521.63
12 $759.80 $796.80 $326,724.84
 Totals for year 1 You will spend $18,679.10 on your house in year 1

In the 1st year, $9,238.34 will go towards YOUR INTEREST

In the 1st year, $9,440.76 will go towards YOUR PRINCIPAL

If you can afford to pay anything extra towards your mortgage, the best time to do this is in the first year or the first few years as this is when you are paying the most interest, almost 50% of your monthly total payments.

Here is a look at how the numbers break down as the years go by:

Year 2

You will spend $18,679.10 on your house in year 2
$8,972.15 will go towards INTEREST
$9,706.95 will go towards PRINCIPAL

Year 5

You will spend $18,679.10 on your house in year 5
$8,127.69 will go towards INTEREST
$10,551.41 will go towards PRINCIPAL

Year 10

You will spend $18,679.10 on your house in year 10
$6,553.87 will go towards INTEREST
$12,125.24 will go towards PRINCIPAL

To see more years of payments, up to the full 25 year period, visit our Mortgage Calculator page and plug in your own numbers, it might surprise you! Every year you pay more and more towards your Principal.