# Amortization

> Amortization is how a fixed mortgage payment pays off a loan: mostly interest at first, mostly principal later. Definition and worked example.

URL: https://mail.mortgage-math-us.com/glossary/amortization/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**Amortization** is the process of repaying a loan in equal scheduled payments that each cover that month’s interest and part of the principal, so the balance reaches zero at the end of the term.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| 30-year fixed average (used in the example) | 7.24% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 |
| 15-year fixed average | 6.6% | [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) | Week of Oct 29, 2026 |

## How it works

Interest is charged on the balance you still owe, so early payments are mostly interest and later ones mostly principal, even though the payment itself never changes on a fixed-rate loan. An amortization schedule lists every payment with that split and the balance left afterwards.

## Example

On a $300,000 30-year loan at 7.24%, the monthly principal and interest payment is $2,044. The first payment includes $1,810 of interest and only $234 of principal. Across the first year you pay $21,625 in interest and $2,909 in principal, and the balance doesn’t fall below half the original loan until year 22. Extra principal payments shorten the schedule — see the [extra payment calculator](https://mail.mortgage-math-us.com/tools/extra-payment-calculator/).

## Related terms

- [Principal](https://mail.mortgage-math-us.com/glossary/principal/) and [interest rate](https://mail.mortgage-math-us.com/glossary/interest-rate/)
- [Loan term](https://mail.mortgage-math-us.com/glossary/loan-term/) and [fixed-rate mortgage](https://mail.mortgage-math-us.com/glossary/fixed-rate-mortgage/)
- [Interest-only loan](https://mail.mortgage-math-us.com/glossary/interest-only-loan/), where the balance doesn’t amortize during the interest-only period

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [CFPB: How does paying down a mortgage work?](https://www.consumerfinance.gov/ask-cfpb/how-does-paying-down-a-mortgage-work-en-1943/)

_General information, not financial advice._