Lenders use DTI to determine how much you can borrow. Under 36% is ideal.
Input loan amount, interest rate, and term length.
See how additional payments accelerate your payoff timeline.
View your payment schedule, total interest, and payoff date.
Adjust variables to find the optimal repayment plan.
Standard loan amortization formula. P = principal, r = monthly rate, n = total payments.
The debt avalanche method (highest interest first) saves more money, while snowball (smallest balance first) gives faster wins.
Even $50 extra per month toward your loan principal can shave years off your payoff timeline.
The interest rate is the base cost of borrowing money, while APR (Annual Percentage Rate) includes the interest rate PLUS additional fees like origination fees, closing costs, and discount points. APR gives you the true total cost of the loan. When comparing loan offers, always compare APR — not just the interest rate — for an accurate cost comparison.
Most lenders prefer a DTI ratio below 36%, with no more than 28% going toward housing. For FHA loans, you may qualify with up to 43% DTI. For conventional mortgages, 45% is often the maximum. To calculate your DTI: add up all monthly debt payments and divide by your gross monthly income.
Amortization is how your loan payment is split between principal and interest over time. In the early years, most of your payment goes toward interest. As the loan matures, more goes toward principal. For example, on a $300,000 30-year mortgage at 7%, your first payment puts about $575 toward principal and $1,750 toward interest.
Generally, if your debt interest rate exceeds what you'd earn from savings (usually 4-5% APY), prioritize paying off debt. However, always maintain a $1,000 minimum emergency fund first to avoid going deeper into debt for unexpected expenses. High-interest credit card debt (15-25% APR) should almost always be paid off before investing.
Making just one extra mortgage payment per year on a $300,000, 30-year loan at 7% can save you over $65,000 in interest and pay off your loan 4-5 years early. For auto loans and student loans, even $50-$100 extra per month can reduce your payoff timeline by months or years. Use our calculators to see your exact savings.