dcsimg
We research, you save.
Got Questions On Rates? (855) 610-2972

When will I begin paying more principal than interest?

By   |  Posted in Ask The Expert

Q: I have a 30-year fixed rate at 4 percent. When will my payment include more principal than interest?

A: In a fixed-rate mortgage, the amount of your monthly payment will not change, but the composition of the payment will over time. The tipping point for a fixed-rate mortgage--when the payment becomes more principal than interest--is a function of the interest rate and term. You might be surprised to find that the amount of the loan doesn't come into play at all!

In your case, a 4 percent 30-year fixed mortgage rate will see a payment comprised of equal parts principal and interest at about payment number 154. If your rate was 3.5 percent, that would move up to about payment number 120. If it was 5 percent, you would be waiting around until payment number 194, more than 16 and a half years after you began making payments.

ATE Graph

To see this for any loan, you can use HSH.com's Mortgage Calculator. Click on the green "See Details Year by Year" button, then scroll down to the year displayed where total annual principal and interest payments are pretty close (the calculators payment component chart can help you here, too), then open up the year to find the exact payment when balance is achieved.

If you prefer a print-and-take away version for your files, you can use our mortgage calculator which will give you a side-by-side breakout, including the payment number.

More help from HSH.com

  • Advantages of a FHA mortgage in 2017

    FHA loans have become more affordable in 2015, thanks to a drop in the annual mortgage insurance premium that the Federal Housing Administration charges.
  • Streamline Refinance Program to Replace HARP

    The HARP refinance program for troubled or underwater homeowners will come to an end in 2017, but a new streamline refinance program will takes its place.
  • Flex Modification: An outline of HAMP's replacement

    The Making Home Affordable Home Affordable Modification Program comes to an end on December 31, 2016, but is being replaced by a new Flex Modification program from Fannie Mae and Freddie Mac.
  • HSH.com’s yearly outlook: 2017 - Nine forecasts and outlooks

    At the start of each year, HSH.com details the important factors we think are most likely to influence the mortgage and real estate markets in the coming year.
  • HSH.com on the latest move by the Federal Reserve

    The Federal Reserve concluded a meeting today with no change to the federal funds rate and no changes to other monetary policy tools.