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-rate mortgage 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.
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 fast amortization calculator which will give you a side-by-side breakout, including the payment number.
A 25-year expert observer of the mortgage and consumer debt markets, Keith Gumbinger has been cited in thousands of articles covering a wide range of consumer finance and economic topics in outlets ranging from the Wall Street Journal to the Bottom Line newsletters. He has been a featured guest on national broadcasts for CNN, CNBC, ABC, CBS and NBC television networks and has been heard on NPR and other national and local radio programs. Keith is the primary researcher and writer for HSH.com's MarketTrends newsletter and has authored or co-authored a number of consumer guides on mortgages, home equity, refinancing and more.