Please Note: This article is written for users of the following Microsoft Excel versions: 97, 2000, 2002, and 2003. If you are using a later version (Excel 2007 or later), this tip may not work for you. For a version of this tip written specifically for later versions of Excel, click here: Creating an Amortization Schedule.

Creating an Amortization Schedule

by Allen Wyatt
(last updated November 18, 2014)

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.)
18. 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:

```http://office.microsoft.com/en-us/templates/TC001056620.aspx
```

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

```http://www.tvmcalcs.com/calculators/apps/excel_loan_amortization
```

ExcelTips is your source for cost-effective Microsoft Excel training. This tip (11627) applies to Microsoft Excel 97, 2000, 2002, and 2003. You can find a version of this tip for the ribbon interface of Excel (Excel 2007 and later) here: Creating an Amortization Schedule.

Author Bio

Allen Wyatt

With more than 50 non-fiction books and numerous magazine articles to his credit, Allen Wyatt is an internationally recognized author. He  is president of Sharon Parq Associates, a computer and publishing services company. ...

MORE FROM ALLEN

Finding the First Non-Digit in a Text Value

If you have a string of text that is composed of digits and non-digits, you may want to know where the digits stop and ...

Discover More

Changing What Is Pasted in a Dialog Box

When you record a macro, Word very literally records what you do. This includes filling in various settings in dialog ...

Discover More

Printing an Extra Blank Envelope

You can easily use Word to print envelopes for your letters. What happens, however, if your printer insists on pushing ...

Discover More

Comprehensive VBA Guide Visual Basic for Applications (VBA) is the language used for writing macros in all Office programs. This complete guide shows both professionals and novices how to master VBA in order to customize the entire Office suite for their needs. Check out Mastering VBA for Office 2010 today!

Understanding Operators

At the heart of working with Excel is the process of creating formulas that calculate results based on information within ...

Discover More

Pulling a Phone Number with a Known First and Last Name

When using an Excel worksheet to store data (such as names and phone numbers), you may need a way to easily look up a ...

Discover More

Counting Odds and Evens

If you have a series of values in a range of cells, you may wonder how many of those values are even and how many are ...

Discover More
Subscribe

FREE SERVICE: Get tips like this every week in ExcelTips, a free productivity newsletter. Enter your address and click "Subscribe."

If you would like to add an image to your comment (not an avatar, but an image to help in making the point of your comment), include the characters [{fig}] in your comment text. Youâ€™ll be prompted to upload your image when you submit the comment. Maximum image size is 6Mpixels. Images larger than 600px wide or 1000px tall will be reduced. Up to three images may be included in a comment. All images are subject to review. Commenting privileges may be curtailed if inappropriate images are posted.

What is 5 + 9?

2014-02-07 18:25:04

David

How do I create a spreadsheet with this formula???????

Monthly Pay=[ rate + rate /([1+rate]^months -1)] X principle
Where rate of %6 means 6/1200

2012-04-21 13:30:29

Mark Russell

The values in cells A1 through A3 are labels. You need to enter the amounts in cells B1 through B3 that correspond to the labels in column A, and then name the cells in column B using the name manager.

2012-04-21 09:07:09

Bob Manne

I tried this exactly as described, yet all of the formulas in B6:E6 show up as ?NAME?
I tried the values in A1:A3 as
Rate: term: principal:
Rate term principal
"Rate" "Term" "Principal"
and got the same result.
What is missing here?

This Site

Got a version of Excel that uses the menu interface (Excel 97, Excel 2000, Excel 2002, or Excel 2003)? This site is for you! If you use a later version of Excel, visit our ExcelTips site focusing on the ribbon interface.