Back to Glossary
Principal Balance
January 19, 2023
In the case of a mortgage or other debt instrument, the principal balance is the amount owing and owed to meet the payback of an underlying obligation, less any interest or other penalties. Mortgage loans that are amortized automatically apply a portion of each monthly payment to the principal debt, with the remainder paid as interest. An interest-only loan does not need payments toward the principal sum each month, but such costs are permitted.
Related Topics
Payment and Debt Ratios
Home Value: Appraised, Estimated, Actual
How Much of a Mortgage Payment Goes to Principal
What Do Underwriters Do?
What Does Loan Underwriting Mean
Loan To Value and Down Payments
What is Underwriting in Real Estate?
Homeowner's Guide: DIY Home Improvement