Mortgage principal is one of the many terms you'll stumble across when getting a loan to buy a home. It is simply the balance you owe from the money you borrowed by taking out a mortgage. However, it's essential to understand how it works and its potential impact on your monthly payment. What is mortgage principal? In any loan, including a mortgage, the principal is the original amount borrowed minus any payments made to the balance. For example, if a home sells for $300,000 and you make a down paymen ...