Negative Amortization Calculator | Loan Balance Growth
Calculate negative amortization scenarios where your loan balance grows. See how minimum payments affect your principal and when you'll hit the neg-am cap.
Loan Details
$
Initial loan principal
%
Current annual interest rate
$
Your current minimum payment
%
Max balance (% of original loan)
Years
Original loan term
Mo
Months since loan started
Current Balance vs Neg-Am Cap
Original
Cap (115%)
$428.000
Current Estimated Balance
Monthly Shortfall
-$833
Months to Cap
18 mo
Balance Growth
+7,0%
Your Minimum Payment
$1.500
Does NOT cover interest
-$833/month added to balance
Full Amortizing Payment
$2.661
Pays principal + interest
Balance Growth Visualization
When You Hit the Cap (Loan Recast)
New Balance
$460.000
New Payment
$3.214
Payment Increase
+114%
Interest Due/Month
$2.333
Deferred Interest
$10.000
Cap Amount
$460.000
Room to Cap
$32.000
Negative Amortization Schedule (Next 24 Months)
| Month | Payment | Interest Due | Shortfall | Balance | % of Cap |
|---|
Understanding Negative Amortization
Negative amortization occurs when your loan payment is less than the interest due. The unpaid interest gets added to your principal, causing your loan balance to grow instead of shrink.
How Negative Amortization Works
- Interest accrues: Each month, interest is calculated on your balance
- Payment shortfall: If your payment doesn't cover the interest, there's a shortfall
- Added to principal: The shortfall is added to your loan balance
- Balance grows: Your loan gets larger, not smaller
What is a Neg-Am Cap?
Most negative amortization loans have a cap (typically 110-125% of the original loan). When your balance reaches this cap, the loan "recasts" - meaning your payment is recalculated based on the new higher balance, often resulting in significant payment shock.
Risks of Negative Amortization
- Payment shock: Payments can double or more after recast
- Underwater mortgage: You may owe more than the home is worth
- Difficulty refinancing: High LTV ratios limit options
- Long-term cost: You pay interest on interest
When to Consider Alternatives
If you're in a negative amortization loan, consider refinancing to a fixed-rate mortgage, making larger payments to stop the balance growth, or consulting a financial advisor about your options.