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# Creating an Amortization Schedule

by Allen Wyatt (last updated April 2, 2013)

Please Note : This article is written for users of the following Microsoft Excel versions: 2007 and 2010. If you are using an earlier version (Excel 2003 or earlier), this tip may not work for you. For a version of this tip written specifically for earlier versions of Excel, click here: Creating an Amortization Schedule.

Mary would like to use Excel to create an amortization schedule for her home mortgage. Problem is, she doesn't know enough about finance to know which of the financial worksheet functions she should use to do the calculations.

It actually is fairly easy to come up with the right calculations. At its simplest, a mortgage payment consists of two parts: principle and interest. Given some basic information such as how much you are borrowing (your principal), what your interest rate is, and how many monthly payments you need to make, you can then come up with your amortization schedule. Try this out:

1. Open a blank worksheet.
2. In cell B1 put your interest rate.
3. Give cell B1 a name, such as "Rate".
4. In cell B2 put the number of months you need to pay.
5. Give cell B2 a name, such as "Term".
6. In cell B3 put how much you are borrowing.
7. Give cell B3 a name, such as "Principal".
8. In cell A6 put the number 1. This represents your payment number.
9. In cell B6 put this formula: =Principal. The amount you put into cell B3 should now also appear in cell B6.
10. In cell C6 put this formula: =PPMT(Rate/12,\$A6,Term,Principal). This is the amount you will pay toward your principal in this payment. (The PPMT function returns the amount of principle for a given payment.)
11. In cell D6 put this formula: =IPMT(Rate/12,\$A6,Term,Principal). This is the amount you will pay in interest in this payment. (The IPMT function returns the amount of interest for a given payment.)
12. In cell E6 put this formula: =PMT(Rate/12,Term,Principal). This is the total amount of the payment.
13. Copy everything from row 6 to row 7.
14. Change cell A7 to the following formula: =A6+1 .
15. Change cell B7 to

the following formula: =B6+C6. This cell now contains the new principal balance for your loan.

16. Copy row 7 down as many rows as you need.
17. Add any explanatory labels desired in the ranges A1:A3 and A5:E5. (See Figure 1.)

Figure 1. A simple amortization schedule.

Remember that I said that this creates a simple amortization schedule. It doesn't take into account varying interest rates, refinancing, non-monthly payments, additional payments, escrow amounts, or any number of other variables. In such instances you would be better to look for a ready-made amortization template. There are any number of them available online, including these from Microsoft:

Microsoft also provides some built-in amortization templates that may have been installed when you installed Excel on your system. If you are using Excel 2007, follow these steps:

1. Click the Office button and then click New. Excel displays the New Workbook dialog box.
2. At the left side of the dialog box, choose Installed Templates. Excel displays the templates installed on your system.
3. Click the Loan Amortization template.
4. Click Create. The template is loaded.
5. Fill in the parameters of your mortgage, as desired.

If you are using Excel 2010 the steps are a bit different:

1. Click the File tab of the ribbon.
2. At the left side of the screen, click New.
3. Click Sample Templates.
4. Click the Loan Amortization template.
5. Click Create. The template is loaded.
6. Fill in the parameters of your mortgage, as desired.

You can also find a very good explanation of amortization schedules at this page:

ExcelTips is your source for cost-effective Microsoft Excel training. This tip (11628) applies to Microsoft Excel 2007 and 2010. You can find a version of this tip for the older menu interface of Excel here: Creating an Amortization Schedule .

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