The principal in a mortgage loan is the original amount borrowed to purchase a property, serving as the foundation for calculating interest and repayment terms. It excludes costs like interest, origination fees, closing costs, and mortgage insurance, though some of these may be added to the loan, increasing the total balance.

Regular mortgage payments gradually reduce the principal balance while also covering interest. Over time, as the principal decreases, the interest payments become smaller, reflecting the reduced outstanding balance. The principal repayment is a key component of building equity in the property.