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A $250,000 loan at 6.5% over 30 years costs $1,580.17 a month with equal payments

Enter a loan amount of $250,000, an annual interest rate of 6.5% and a term of 30 years (360 months) and equal payments come to $1,580.17 a month, with total interest of $318,861.58. On the same loan equal principal starts at $2,048.61 and falls every month to $699.81, and its total interest of $244,428.64 is the lowest of the four methods. Interest-only costs $1,354.17 a month in interest alone and repays the full $250,000 at the end, with total interest of $487,501.20.

The calculator puts the four methods in one table, adds an interest-only period and an extra payment if you want them, and shows a yearly schedule. The sections below explain the rule behind each method, how much an interest-only period and an extra payment change total interest, what a graduated loan is, and why the result can differ from a lender's figure by a few cents, all with numbers.

The four methods side by side ($250,000 · 6.5% · 30 years)

The last equal payment is $1,580.55, which is 38 cents more than the others, because the rounding differences from paying to the cent each month are settled in the final payment. That is why total repaid = principal + total interest holds exactly for every method.

How each method is calculated

1. The monthly rate is the annual rate divided by 12, so 6.5% a year is about 0.5417% a month. Each month's interest is the previous balance times the monthly rate, rounded to the cent. The first month's interest is $250,000 × 0.5417% = $1,354.17.
2. Equal payments (a standard amortizing loan, such as a fixed-rate mortgage): every month you pay A = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r the monthly rate and n the number of payments. For $250,000, 0.5417% and 360 payments that is $1,580.17, and whatever remains after the month's interest goes to principal. In month 1 that is $1,354.17 of interest and $226.00 of principal.
3. Equal principal: you repay the same principal each month, $250,000 ÷ 360 = $694.44, and interest is charged on the shrinking balance. The first payment is $2,048.61, the second is $2,044.85, and each payment is about $3.76 lower than the one before.
4. Interest-only (bullet repayment): you pay $1,354.17 of interest every month, and the last payment adds the $250,000 principal, making it $251,354.17.
5. Graduated: the first payment is the smallest and each month's payment rises by the amount you enter. The first payment is solved backward so that the balance reaches 0 at the end. With an increase of $1.72 a month on this loan, the first payment is $1,365.97 and the last is $1,986.55.
6. The last scheduled payment clears the whole remaining balance. Rounding differences from the earlier months are settled there, so the balance never ends a few cents over or under.

The split between principal and interest changes year by year

With equal payments the amount is the same every month, but what it is made of keeps shifting. Early on the balance is large, so most of each payment is interest; later most of it is principal. The yearly schedule groups this by year, and “Show all 360 months” opens every payment.

In year 1, 85% of what you pay is interest. Principal first outweighs interest in month 233, inside year 20, and in year 30, 97% of the payments are principal. At the halfway point of the term (year 15) you still owe $181,397.99, 73% of the original loan, which is the defining feature of an equal-payment loan.

An interest-only period does not cancel any interest

During an interest-only period you pay interest alone and the principal does not fall. The monthly burden is lighter, but because the balance stays the same, that period's interest is simply added on, and once it ends the remaining term is shorter, so the payment goes up.

The interest-only period must be shorter than the loan term. The interest-only method has no such period, so the field disappears when that method is selected.

An extra payment can shorten the term or lower the payment, and the savings differ

Paying part of the principal early, at a payment you choose, cuts the interest that follows. What happens to the smaller balance can go two ways. Shorter term keeps the monthly payment and brings the end date forward. Lower payment keeps the end date and recalculates the payment over the remaining months. The same extra payment saves very different amounts of interest.

With a shorter term the loan ends 82 months early, at payment 278 instead of 360. This calculator does not include fees or penalties for paying a loan off early. Whether a lender charges one, how much and for how long all differ by country, lender and product, so check your loan agreement and your financial regulator's guidance. If a fee applies, subtract it from the interest saved before you compare.

A graduated loan starts with the smallest payment and rises by a fixed amount each month

In a graduated-payment loan the first payment is the smallest and the payment rises by a set amount every month until the end of the term. Here you enter the monthly increase and the calculator solves backward for the first payment that brings the balance to zero at maturity. If you leave the increase blank, an example amount is filled in that puts the first payment just above the first month's interest, and an increase of 0 is the same as equal payments.

The graduated loan costs $2,456.88 less than equal payments in year 1, but its total interest is $34,037.12 higher. It eases the early years for someone whose income will grow, at a higher total cost. With the default increase the first month's payment is $1,365.97, of which only $11.80 goes to principal. The increase has a ceiling: if the first payment would fall below the first month's interest, the balance would grow at the start, so the calculator blocks that case and shows the largest allowed increase ($1.81 a month in this example). It models only a fixed monthly step, while real graduated-payment products may step up once a year or by a percentage, and only some lenders offer them, so check the product terms.

The right method depends on your situation

Why the result can differ from a lender's figure by a few cents

This calculator rounds each month's interest to the cent, the smallest unit of the dollar, and settles the balance in the last payment. Lenders may instead accrue interest by the day (actual days ÷ 365 or 360), round or truncate differently, treat a payment date that falls on a weekend or holiday in their own way, or reset a variable rate at a different time, so a monthly payment can differ by a few cents or a few dollars. For $10,000 at 5% over 12 months the exact equal payment is $856.0748, the calculator shows $856.07, and the last payment is $856.12. That is accurate enough to compare and plan, but the figures in your loan agreement and repayment notice are the ones that count.

Common mistakes

• Entering a monthly rate as the annual rate. Enter 6.5, the annual rate. Entering the monthly 0.5417 would charge only a twelfth of the interest.
• Using an APR in place of the interest rate. An APR folds in fees and gives a slightly different payment. Enter the stated interest rate from the loan offer.
• Choosing a method on total interest alone. Equal principal costs less interest, but its first payment is $468.44 higher than with equal payments. Look at early cash flow too.
• Reading an interest-only period as interest relief. A 12-month interest-only period adds $3,504.72 of interest.
• Trusting the savings from an extra payment without checking fees. If your loan charges a prepayment fee, take it off the interest saved before deciding.
• Mixing up years and months. Check the unit buttons: 30 years is 360 months.
• Entering a graduated increase that is too large. If the first payment falls below the interest, the balance grows and the case is not calculated. Lower the increase to the ceiling shown.

Limits and cautions

• A fixed rate is assumed. When and by how much a variable rate changes is not modeled.
• It uses a nominal monthly rate (annual rate ÷ 12) with no daily accrual.
• Only one extra payment can be entered. Prepayment fees, origination fees, taxes, insurance and other loan costs are not calculated.
• A graduated loan covers one structure only: a fixed monthly increase. Percentage increases and annual step-ups are not covered.
• Inputs are limited to a loan amount of $100 billion, a term of 600 months and a rate of 50%. How much a lender will let you borrow depends on its own affordability rules and is not calculated here.

Reference date The examples in this article are calculation results as of 6 October 2026. The 6.5% rate is an example only, so check the lender's published rate for a real loan. The figures come from the calculator's own method, and the sources below are general consumer guidance.

Sources

• 01Federal Reserve Board — Consumers & CommunitiesConsumer resources from the U.S. central bank, including mortgage and fraud guidance. Checked 6 October 2026
• 02FDIC — Consumer Resource CenterConsumer guides from the U.S. deposit insurer, including its Money Smart financial education program. Checked 6 October 2026

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