Back to Glossary
Unpaid Principal Balance
January 19, 2023
The loan's unpaid principal balance is the portion of the loan that has not yet been repaid to the lender by the borrower. This amount represents the residual risk of nonpayment borne by the lender. Because a typical loan payment includes both an interest charge and the return of some principal, the unpaid principal balance cannot be computed simply by subtracting all loan payments to date from the original loan amount. To calculate the outstanding principal sum, you must remove the interest paid to the lender.
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