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The month you owe less than you borrowed
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This guide
You owe less than you borrowed after the first principal payment. The early drop is small because interest takes most of the payment.
It starts immediately
On a normal amortizing payment, month one pays some principal. The balance after that payment is already below the amount borrowed. There is no waiting period where the balance rises.
Fees paid up front are not added to the balance, so the chart does not open higher than price minus down payment.
Why it feels slow
The dollar drop in year one is the principal column of the first yearly row. On a long loan that column is much smaller than the interest column. You are paying down the loan. You are not paying it down quickly.
Owing less than you borrowed is not the same as owing less than the house cost, and it is not the 80% PMI line. Those are larger gaps.
A zero or tiny loan
If the down payment equals the price, nothing is borrowed and there is no balance to fall. Housing can still be tax, insurance, and HOA.
If the rate is zero, the entire payment is principal and the balance falls in equal steps. Cumulative interest stays zero.
This explains how WiseCalculator treats the numbers you type. It is not a lender’s offer and it is not advice for your loan.
More in Home
- Conventional PMI uses the original priceBoth the 80% request and the 78% automatic end are measured against the home price you typed, not a later value.
- What a mortgage payment actually includesPrincipal and interest are only the loan. The housing number also holds property tax, homeowners insurance, PMI, and HOA.
- Principal and interest in the first monthThe first payment is mostly interest because the balance is still the full loan. Principal is whatever is left of the payment.