Can I choose to pay only principal?

You must pay at least the scheduled amount each month. Extra amounts can usually be directed to principal if you tell your servicer in writing.

Why does my 1098 show so much interest the first year?

Interest is front-loaded on amortizing loans. In early years, most of each payment is interest because the balance is highest.

Principal vs Interest: How Your Mortgage Payment Works

Interest is charged on the remaining balance; principal pays down the loan. The split changes every month on a fixed payment.

Published August 28, 2026

Each mortgage payment splits between principal (paying down what you owe) and interest (the cost of borrowing). On a fixed payment, the total stays the same while the mix shifts every month.

Interest is calculated on the balance

Monthly interest equals beginning balance × monthly rate. When you pay down principal, the next month's interest charge is smaller. Extra principal payments save money because they shrink the balance future interest is charged on.

Principal builds equity

Principal payments reduce what you owe the lender. Combined with your down payment and any appreciation, that is your equity stake. Interest does not build equity — it is the price of the loan.

Taxes, insurance, and PMI are separate

Your monthly statement may show more than principal and interest. Property taxes, homeowners insurance, PMI, and HOA fees are not part of the P&I formula. See what PITI means and the amortization calculator for the full month-by-month split.

Calculators for this topic

Mortgage Payment Calculator — Quickly calculate your monthly principal and interest payment for any loan amount, rate, and term.
Amortization Calculator — View a full amortization schedule showing every payment, principal, interest, and remaining balance.
Extra Mortgage Payment Calculator — See how much time and interest you could save by making extra payments on your mortgage.

Frequently Asked Questions

: You must pay at least the scheduled amount each month. Extra amounts can usually be directed to principal if you tell your servicer in writing.
: Interest is front-loaded on amortizing loans. In early years, most of each payment is interest because the balance is highest.

Educational information only — not financial, legal, or tax advice. Financial disclaimer.