Home loans come with an amortization schedule, which is a monthly breakdown of how each mortgage payment is applied to loan principal and interest. In the first years of a home loan, most of each payment gets applied to interest. As the loan gets older, more and more of each payment is applied to reducing the principal balance of the loan.

Home loans are typically amortized over 15, 20, 30 or 40 years. Some loans have what is called negative amortization, where the loan balance increases because the borrower’s payments are not large enough to cover the minimum interest each month.