[1] For a typical consumer loan such as a home mortgage or automobile loan, the original unpaid principal balance is the amount borrowed, and therefore the amount the borrower owes the lender on the origination date of the loan.
The unpaid principal balance will decrease as time goes on for the loans that are structured with level payments.
For these common loans, each monthly payment includes both interest and principal.
The level monthly payment for a 30-year mortgage loan is $599.55.
The UPB at the end of first month is calculated as follows: Principal paid in first payment of $599.55