---
title: "Fully amortized loan: definition | Desert Rock Capital"
url: "https://www.desertrockcapital.com/glossary/fully-amortized-loan"
description: "A fully amortized loan is a loan whose scheduled payments pay off the entire balance, both principal and interest, by the end of the term."
---

Loan structure

# Fully amortized loan
All lending terms
Definition

A fully amortized loan is a loan whose scheduled payments pay off the entire balance, both principal and interest, by the end of the term. The final scheduled payment leaves nothing left to owe.

A fully amortized loan is structured so that the regular payments are calculated to retire the whole balance, principal and interest, exactly by the end of the term. Because every payment includes enough principal to bring the balance to zero on schedule, there is no large remaining amount due at the end. This distinguishes a fully amortized loan from a partially amortized loan or an interest-only loan, which can leave a balloon payment to be paid at maturity. Fixed-rate installment loans and many fixed-rate mortgages are commonly fully amortized, which makes the payoff date and the total of payments known in advance.

Source: [Truth in Lending Act (Regulation Z), 12 CFR §1026.43](https://www.law.cornell.edu/cfr/text/12/1026.43). This definition is general educational information, not legal or financial advice.
Related

- [Personal loans](/services/personal-loans)
- [Signature loans](/services/signature-loans)
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