Definition
The amount you borrowed, or the part of a loan balance that is still unpaid, not counting interest.
What it means
Principal is the original amount of a loan or the remaining balance you owe on it. Each regular payment on an installment loan, such as a mortgage or car loan, is split between interest and principal. Early in a long loan, most of the payment covers interest; later, more goes to principal. Paying extra toward principal lowers the balance faster, which reduces total interest and can shorten the loan. If you make extra payments, it helps to tell the lender to apply them to principal, and to check your loan documents for any prepayment penalty. The Loan Estimate and monthly statements for a mortgage show the principal balance. In investing, principal also means the money you originally put in, which can be lost in many investments.
Example
On a $240,000 30-year mortgage at 6.5%, the first monthly payment of about $1,517 includes about $1,300 of interest and only about $217 of principal.
Illustrative numbers only. Your situation will differ.