How amortization works
With a fixed-rate loan your payment stays the same, but its makeup changes. Each month, interest is charged on the remaining balance and the rest of the payment reduces principal. Early on, the balance is large, so most of the payment is interest; as the balance falls, more of each payment goes to principal.
On a typical 30-year loan, it can take well over a decade before more than half of each payment goes to principal. That is why extra payments early in the loan have such a large effect on total interest.
Why investors track amortization
Principal paydown is a real part of a rental property’s return: your tenants’ rent is gradually buying down the loan. The cumulative principal column shows the equity you build from paydown alone, before any appreciation.
Mortgage interest on a rental is generally deductible against rental income, while principal is not. The schedule shows how much deductible interest you will pay each year, which feeds into the rental income tax calculator.
Frequently asked questions
Why is so much of my early payment interest?
Interest is calculated on the outstanding balance, which is highest at the start of the loan. As the balance falls, the interest portion shrinks and the principal portion grows.
Is mortgage interest on a rental property deductible?
Generally yes — interest on a loan used to buy or improve a rental property is deductible as a rental expense. Principal payments are not deductible. Consult a tax professional for your situation.
How do extra payments change the schedule?
Extra payments go straight to principal, so every later payment carries less interest. The loan ends sooner and total interest drops.
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For informational purposes only. Tax rules change and depend on your situation — consult a tax professional or financial advisor before making investment decisions.