Negative Amortization
When your payment is too small to cover the interest due, so your loan balance actually grows.
In plain English
Negative amortization happens when a loan's minimum payment doesn't fully cover the interest owed for that period — the unpaid interest gets added to your principal balance instead of reducing it, so you owe more over time.
This is rare on standard mortgages today but worth watching for on certain ARM structures or payment-option loans — always confirm your payment covers at least the full interest due.
Where you'll run into it
Guides and tools on TheBuyingPath that cover negative amortization in context.
Related terms
Not sure where this fits in your process?
Answer a few questions and get a personalized homebuying roadmap — where you are now, what comes next, and which terms like this one matter at each step.
Start your roadmap