Interest Portion of Payment
Interest Portion of Payment
Calculates how much of a specific loan payment goes toward interest. Takes the original loan setup plus the payment number, computes the balance immediately before that payment, and multiplies by the per-period rate.
When to use: Use to spot-check a single payment's interest charge without scrolling through a full amortization schedule. Common questions: "How much of payment 60 goes to interest?", "What's the interest on the first payment of my mortgage?", "What does the interest portion look like in the final year?"
Formula
Variables
| Symbol | Name | Description | Unit |
|---|---|---|---|
| Interest | Interest Portion | Interest component of payment p | $ |
| PV | Original Loan | Original loan amount | $ |
| PMT | Payment | Periodic payment amount (per period, e.g. monthly) | $ |
| k | Annual Rate | Nominal annual interest rate as a decimal (e.g. 0.06 for 6% APR) | % |
| m | Periods/Year | Number of payments per year (1 for annual, 12 for monthly) | integer |
| p | Payment Number | Which payment to compute (1 = first payment) | integer |
Real-Life Examples
Example 1: First Mortgage Payment
$300,000 mortgage at 6% APR, monthly payments of $1,798.65 over 30 years. Interest portion of payment 1?
Given
Step-by-Step
For these inputs, Interest Portion is $1,500.00 under the stated payment, compounding and accounting assumptions.
Example 2: Mid-Loan Payment
Same $300k 30-year mortgage at 6%. What's the interest on payment 180 (year 15)?
Given
Step-by-Step
For these inputs, Interest Portion is $1,069.38 under the stated payment, compounding and accounting assumptions.
Example 3: Final Payment
Same loan. What's the interest on the very last payment (p=360)?
Given
Step-by-Step
For these inputs, Interest Portion is $8.96 under the stated payment, compounding and accounting assumptions.
Frequently Asked Questions
Interest is charged on the outstanding balance, and the balance shrinks every time you make a payment. The first payment's interest is calculated on the full loan amount; the last payment's interest is calculated on whatever sliver remains. That curve is why amortization tables look "frontloaded."
Same math, different presentation. The amortization table on the Payment from PV formula shows the breakdown for every payment; this formula answers a single question quickly without scrolling. Use it when you want one number, not the whole schedule.
In the US, mortgage interest on a primary residence is generally deductible if you itemize, subject to loan-amount limits. Knowing the interest portion of each payment helps estimate the deduction. Consult a tax professional for your specific situation.
Extra principal payments lower the balance immediately, which reduces the interest portion of every future payment. This formula assumes the standard schedule with no prepayments — to model extra payments accurately, walk the schedule manually with the extra principal applied each month.