Guide · BeginnerLoans & Debt
How to Pay Off Your Mortgage Early: A Simple Guide to the Mortgage Prepayment Calculator
You have a 30-year mortgage and a little money left over at the end of the month, a yearly bonus, or a tax refund. Should it go to the loan? How many years would it take off, how much interest would it save, and is there a catch, like a penalty for paying early? The Mortgage Prepayment & Early Payoff Calculator (US) answers that by running your loan twice, once with only the regular payments and once with your extra payments, and comparing the two. This guide follows four people (they are made up): Sam adds $200 every month, Ben pays half his payment every two weeks, Peter puts his yearly bonus and a one-time tax refund towards the loan, and Aaron sells his home and pays the loan off in full. You will see every box they fill in, what each answer means, and the US rules that matter when you pay early.
29 October 202619 min readBy CalcGlass Team
In short
- Extra money paid on a mortgage goes to principal, so every later month is charged less interest. Small, regular extras add up to years.
- Sam's $200 a month takes 7 years off a 30-year loan and saves $109,928 of interest.
- Most US mortgages have no prepayment penalty. Where one is allowed, it is at most 2 % in the first two years, 1 % in the third, and none after.
- Paying extra can end PMI sooner if you ask your servicer to cancel it at 80 %; the automatic 78 % date does not move.
- Paying off early is your choice and closes the loan. It is not the same as a lender's foreclosure.
- Every example opens the calculator with the numbers filled in, so you can change them to your own.
01Meet Sam, Ben, Peter and Aaron
Four homeowners with ordinary 30-year fixed-rate loans, each paying off early in a different way. All four loans start on 1 December 2026, so the first payment is in January 2027.
| Who | Home and loan | Rate | How they pay early |
|---|---|---|---|
| Sam | $375,000 home, 20 % down, a $300,000 loan | 6.75 % | $200 extra every month |
| Ben | $320,000 home, 10 % down, a $288,000 loan with PMI | 6.5 % | Half his payment every two weeks |
| Peter | $450,000 home, 20 % down, a $360,000 loan | 6.25 % | A $5,000 bonus every December and a one-time $3,200 tax refund |
| Aaron | $350,000 home, 20 % down, a $280,000 loan | 7 % | Sells after two years and pays the loan off in full |
02Quick start: Sam's $200 a month in 30 seconds
Sam is a nurse with a $300,000 loan on a $375,000 home, at 6.75 % for 30 years. The regular payment is $1,946 of principal and interest. After the bills, Sam has about $200 a month to spare. Here is what Sam does:
- Open the Mortgage Prepayment & Early Payoff Calculator (US).
- Type the home price: 375000, the down payment: 20 (keep the switch on % of price), choose 30 yr and type the rate: 6.75.
- Type the loan start date: 1 December 2026.
- Type Extra Every Month: 200, starting from payment 1.
- Read the big box: Interest Saved $109,928, paid off 7 years sooner, in December 2049 instead of December 2056.
The interest on Sam's loan without extra payments
| Interest Sam still pays | $290,558 | 73 % |
|---|---|---|
| Interest saved by $200 a month | $109,928 | 27 % |
03Every box in the calculator, explained
The first boxes describe your loan, the same way as on the Mortgage Payment Calculator. The next ones describe how you pay early. Every amount is in US dollars.
Home Price
The price of the home when you bought it (or will buy it). The loan is this price minus your down payment. You can type the number or drag the slider.
- Where to find it:
- Your purchase contract or Closing Disclosure.
- Example:
- Sam types 375000.
- Common mistake:
- Typing today's balance or today's value. For a loan you already have, enter the original price and down payment and the loan start date: the calculator replays the loan from the start, so payment numbers and dates line up with your statements.
Down Payment
The cash you paid up front. Use the switch beside the box to enter it as % of price or as a $ amount. Under 20 % usually means PMI, which matters for when it ends.
- Where to find it:
- Your Closing Disclosure.
- Example:
- Sam: 20 %, which is $75,000. Ben: 10 %, which is $32,000.
Loan Term
How many years the loan runs. Pick 15 yr, 20 yr or 30 yr, or choose Custom and type any whole number of years from 1 to 40.
- Where to find it:
- Your note or Closing Disclosure.
- Example:
- All four borrowers have 30-year loans.
Interest Rate (APR)
The yearly interest rate on the loan, as a percentage. The calculator divides it by 12 for the monthly rate. This calculator is for fixed-rate loans.
- Where to find it:
- Your note or your monthly statement.
- Example:
- Sam: 6.75. Ben: 6.5. Peter: 6.25. Aaron: 7.
- Common mistake:
- Using a rate you saw advertised today instead of the rate on your own loan.
Property Tax and Home Insurance
Yearly property tax (as a percentage of the home price) and your yearly homeowners insurance premium. They are shown in the summary as monthly amounts but left out of the comparison, because you keep paying them after the loan is paid off. The calculator starts at 1.1 % and $1,500 a year.
- Where to find it:
- Your escrow statement or tax bill, and your insurance policy.
- Example:
- For Sam, 1.1 % of $375,000 is $344 a month, and $1,500 a year is $125 a month.
PMI Rate
Private mortgage insurance, as a yearly percentage of the original loan, split over 12 months. It applies only when the loan starts above 80 % of the home price. When it ends is set by When PMI ends under More options.
- Where to find it:
- Your Loan Estimate, Closing Disclosure or monthly statement.
- Example:
- Ben's loan is 90 % of the price, so PMI of 0.6 % applies: $144 a month. Sam, Peter and Aaron put 20 % down, so no PMI.
Loan start date (optional)
The month the loan started, usually the closing date. The first payment is counted one month later. It puts real months on the payoff dates, lets the yearly extra fall in a calendar month, and lets you pay the lump sum on a date. It does not change any amount.
- Where to find it:
- Your Closing Disclosure.
- Example:
- All four loans start on 1 December 2026, so payment 1 is in January 2027.
Extra Every Month
Extra money added to every monthly payment, on top of the regular payment, to pay down principal. Set it to 0 for none. It starts at $200, so set it to 0 if you only want to try another way of paying early.
- Where to find it:
- Your own budget: what you can spare every month without touching your emergency savings.
- Example:
- Sam types 200.
- Common mistake:
- Forgetting to tell your servicer the extra is for principal only. Otherwise it may be held or treated as an early regular payment, which does not cut your interest the same way.
Starting From Payment No.
The payment the monthly extra starts with. Payment 1 is the first payment; payment 61 is the first payment of year 6.
- Example:
- If Sam waited until payment 61 to start the $200, the saving would be $70,972 instead of $109,928: starting early matters.
Extra Once a Year and Paid in
An extra principal payment made once every year, and the month it is paid. With a loan start date, the month is a calendar month. Without one, January means the 1st payment of each loan year, February the 2nd, and so on.
- Where to find it:
- A yearly bonus, a tax refund you expect every year, or any other yearly money.
- Example:
- Peter types 5000 and chooses December, when his bonus is paid.
One-Time Lump Sum, paid by Payment no. or Date
A single extra payment towards principal. The switch beside it chooses how you say when: Payment no. shows the Lump Sum With Payment No. box; Date shows the Lump Sum Date box, which needs the loan start date. The lump sum is paid with the payment due in that month.
- Where to find it:
- An inheritance, a one-off refund, or money from selling something.
- Example:
- Peter pays a $3,200 tax refund once, choosing Date and 15 April 2027, so it goes with payment 4.
- Common mistake:
- Choosing a date before your first payment. The calculator asks for a date on or after it.
Pay half every two weeks (biweekly)
Turn this on to pay half of your monthly principal and interest every two weeks. That is 26 half-payments, or 13 full payments, a year: one more than paying monthly. The calculator counts that 13th payment as one-twelfth of your monthly principal and interest added to every payment as extra principal.
- Where to find it:
- Ask your servicer whether it offers biweekly payments and how it applies them: some apply each half as it arrives, some hold it until the full payment is there, and some programs charge a fee.
- Example:
- Ben's $1,820 payment becomes $910 every two weeks.
Pay off in full early and Pay Off After Payment No.
Turn this on to pay off the whole remaining loan right after a chosen payment, for example when you sell or refinance. A Pay Off After Payment No. box appears. You see the payoff amount: the balance left after that payment, plus any payoff fee and prepayment penalty.
- Where to find it:
- Your sale or refinance closing date tells you which payment is your last.
- Example:
- Aaron sells after payment 24 and tries payment 25 to see what one more month changes.
04More options & assumptions
Below the main boxes is a button called More options & assumptions. Tap it to open five extra boxes. Most people can leave them as they are; check your loan papers before changing them.
HOA Dues (optional)
Homeowners association dues per month. Like tax and insurance, they are shown in the summary but are not part of the comparison, because they do not end when the loan does.
- Example:
- None of the four borrowers has an HOA, so they leave it at 0.
Prepayment Penalty (optional)
A fee some loans charge for paying off early, as a percentage of the amount prepaid. Most US mortgages have none, so leave it at 0 unless your loan papers say otherwise. Here it is charged on the lump sum and on a payoff in full made inside the penalty years, not on small regular extras.
- Where to find it:
- Your note and your Closing Disclosure, which say whether the loan has a prepayment penalty.
- Example:
- Aaron's note says 2 % in the first two years, so he types 2.
- Common mistake:
- Assuming every loan has a penalty. FHA, VA and USDA guaranteed loans do not allow one (see the rules below).
Penalty Applies For
How many years from the start of the loan the penalty applies. A payoff after payment 24 is inside a 2-year window; payment 25 is outside it.
- Where to find it:
- Your note.
- Example:
- Aaron types 2.
Payoff / Release Fee (optional)
Any fee charged when the loan is paid off, such as a fee for recording the release of the mortgage. It is part of the payoff amount. Because it is paid whenever the loan ends, early or on time, it does not change the saving.
- Where to find it:
- Your payoff statement lists the fees.
- Example:
- Aaron's servicer charges $150, so he types 150.
When PMI ends
I ask at 80 % (the default) assumes you ask your servicer in writing to cancel PMI as soon as your actual balance reaches 80 % of the home's original value, and that you qualify. Automatic at 78 % assumes you do not ask: PMI ends on the date the original schedule reaches 78 %, and extra payments do not move that date. The calculator uses the home price as the original value.
- Where to find it:
- Your PMI disclosure, and your servicer for the conditions.
- Example:
- With biweekly payments and I ask at 80 %, Ben's PMI ends after payment 65 (May 2032). With Automatic at 78 %, it ends after payment 109 (January 2036), the same as without extras.
05Every result, explained
These are Sam's results: a $300,000 loan at 6.75 % for 30 years, starting 1 December 2026, with $200 extra every month.
Interest Saved: $109,928
The big number: the interest you do not pay because of the extra payments. Under it: paid off 7 years sooner, December 2049 instead of December 2056.
- Example:
- $400,486 of interest without extras, minus $290,558 with them.
Payoff Date and Time Saved
When the last payment falls, without and with the extras, and the difference.
- Example:
- Dec 2056 → Dec 2049, so Sam saves 7 years.
Total Interest: Without → With Extra Payments
All the interest over the life of the loan, both ways.
- Example:
- $400,486 → $290,558.
PMI Ends, PMI Saved
Shown only when the loan has PMI: the payment after which PMI stops, both ways, and the PMI you no longer pay.
- Example:
- Ben saves $4,320 of PMI (see his story below).
Net Saving After Penalties
Interest saved plus PMI saved, minus any prepayment penalty. This is the honest bottom line.
- Example:
- Sam has no PMI and no penalty, so it is also $109,928.
Loan Amount, Down Payment, Principal & Interest, Regular Monthly Payment
The loan itself, as the Mortgage Payment Calculator shows it. The regular monthly payment includes tax and insurance, before any extras.
- Example:
- $300,000 loan, $75,000 down (20%), $1,946 of principal and interest, $2,415 a month in all.
The comparison table
Without extra payments against with extra payments, line by line: payoff date, time to pay off, total interest, extra principal paid, PMI, any penalty and fee, and the total paid on the loan.
- Example:
- Sam pays $55,000 of extra principal, and the total paid on the loan falls from $700,486 to $590,558.
The year-by-year table and the charts
Every year until the loan closes: principal (including extras), interest, extra paid and the balance left. Two charts draw the balance and the interest paid so far, without and with the extras.
- Example:
- In Sam's year 1, $5,673 goes to principal (including $2,400 of extras) and $20,077 to interest, leaving $294,327.
06Ben pays half every two weeks, and his PMI ends sooner
Ben is a warehouse supervisor paid every two weeks. He bought a $320,000 home with 10 % down, so he has a $288,000 loan at 6.5 % and pays PMI of $144 a month. His regular principal and interest is $1,820. He switches to paying half, $910 every two weeks, so each payment lines up with his paycheck.
Open Ben's biweekly paymentsInterest saved $83,766; PMI ends after payment 65- Interest Saved: $83,766. Paid off 5 years 10 months sooner, in February 2051 instead of December 2056.
- 26 half-payments a year are 13 full payments: in effect about $152 a month of extra principal, $43,840 over the loan.
- PMI Ends: after payment 95 (November 2034) → after payment 65 (May 2032), if Ben asks his servicer to cancel it at 80 %. PMI Saved: $4,320.
- Net Saving After Penalties: $88,086, interest and PMI together.
07Peter puts his bonus and a tax refund towards the loan
Peter is an engineer with a $360,000 loan on a $450,000 home, at 6.25 %. His regular principal and interest is $2,217. He can't spare money every month, but he gets a $5,000 bonus every December, and in April 2027 he gets a one-time $3,200 tax refund.
Open Peter's bonus and tax refundInterest saved $168,984; paid off 10 years sooner- Interest Saved: $168,984. Paid off 10 years sooner, in December 2046 instead of December 2056.
- Total Interest: $437,969 → $268,985.
- Extra principal paid: $98,200, which is 19 bonuses of $5,000 plus the $3,200 refund. Year 1 carries $8,200 of extras: the refund in April and the first bonus in December.
- Without the tax refund, the bonuses alone save $161,241. That one $3,200 payment, made early, saves another $7,743 of interest and 3 months.
08Aaron sells and pays off in full: the payoff amount and a penalty
Aaron is a sales manager with a $280,000 loan on a $350,000 home, at 7 %. Two years in, he takes a job in another city and sells the home. His note has a prepayment penalty: 2 % of the amount prepaid in the first two years, and none after. His servicer charges a $150 release fee.
Open Aaron's payoff after payment 24Payoff amount $279,738, including a $5,482 penalty- Payoff Amount After Payment 24: $279,738. That is the balance paid off, $274,106, plus the prepayment penalty, $5,482, plus the $150 fee.
- Payoff Date: December 2028.
What Aaron pays to close the loan after payment 24
| Balance paid off | $274,106 | 98 % |
|---|---|---|
| Prepayment penalty (2 %) | $5,482 | 2 % |
| Release fee | $150 | 0 % |
Aaron's buyer is flexible, so he tries closing one month later, after payment 25. That payment falls in year 3, outside the penalty window:
Open Aaron's payoff after payment 25Payoff amount $273,992, no penalty- Payoff Amount After Payment 25: $273,992: the balance of $273,842 plus the $150 fee, and no penalty.
- Waiting one month avoids the $5,482 penalty. Your own note decides: check exactly when its penalty ends.
09All four, side by side
| Person | Extra payment | Years saved | Interest saved |
|---|---|---|---|
| Sam | $200 every month | 7 years | $109,928 |
| Ben | Half the payment ($910) every two weeks | 5 years 10 months | $83,766 |
| Peter | $5,000 every December and a $3,200 refund once | 10 years | $168,984 |
| Aaron | Pays off the $273,842 balance after payment 25, when he sells | 27 years 11 months (the loan ends with the sale) | $350,212 (interest never charged, because the loan is closed) |
Aaron's figures look the largest because his loan simply ends; the money that matters to him is the payoff amount and the penalty. For Sam, Ben and Peter, the bar chart compares what share of their loan's lifetime interest the extras removed.
Share of lifetime interest saved by paying early
| Sam: $200 a month | 27.40 % |
|---|---|
| Ben: biweekly | 22.80 % |
| Peter: bonus and refund | 38.60 % |
10The US rules in plain words
A few federal rules decide what paying early can cost you and what your servicer must do. State law can be stricter, so check yours too.
Prepayment penalties
Most US mortgages have none. Under federal rules for most mortgages, a penalty is allowed only on a fixed-rate qualified mortgage that is not higher-priced, at most 2 % of the amount prepaid in the first two years and 1 % in the third year, and none after three years. A lender that offers a loan with a penalty must also offer you one without. The penalty must also be allowed by other law, so your state can limit it further. Penalties do not normally apply to extra principal paid in small chunks.
- Where to find it:
- 12 CFR 1026.43(g) (Regulation Z) and the CFPB's page on prepayment penalties.
- Example:
- Aaron's 2 % in the first two years is within these limits.
FHA, VA and USDA loans
FHA lenders must accept a prepayment at any time and in any amount. VA loans can be prepaid at any time without a premium or fee. USDA guaranteed loans cannot require a prepayment penalty.
- Where to find it:
- 24 CFR 203.558 (FHA), 38 CFR 36.4311 (VA), 7 CFR 3555.104(b) (USDA).
- Example:
- With an FHA, VA or USDA guaranteed loan, leave Prepayment Penalty at 0.
Say "principal only"
When you pay extra, tell your servicer the extra is for principal only, through its website, a note with the payment or a call, and check that the next statement shows a lower balance. This is practical advice, not a federal rule: without it, the money may be held or treated as an early regular payment.
- Example:
- Sam ticks the principal-only option in the servicer's app each month.
PMI at 80 % and 78 %
Under the Homeowners Protection Act you can ask in writing to cancel PMI once your balance reaches 80 % of the home's original value, and extra payments get you there sooner. You need a good payment history, to be current on payments, and the home's value must not have fallen below its original value. If you do not ask, PMI must end automatically when the original schedule reaches 78 %, if you are current.
- Where to find it:
- 12 U.S.C. 4901 and 4902, and the CFPB's page on cancelling PMI.
- Example:
- Ben's PMI can end after payment 65 if he asks, or after payment 109 if he does not.
Payoff statement
For most home loans, your servicer must send an accurate payoff statement within 7 business days of your written request.
- Where to find it:
- 12 CFR 1026.36(c)(3) (Regulation Z).
- Example:
- Aaron asks for one as soon as he accepts the buyer's offer.
Escrow refund
After payoff, any money left in your escrow account must generally be refunded within 20 days, not counting weekends and legal public holidays, unless you agree to move it to the escrow account of a new mortgage with the same lender or servicer. After payoff you pay property tax and home insurance yourself.
- Where to find it:
- 12 CFR 1024.34(b) (Regulation X).
- Example:
- Aaron gets his escrow balance back after the sale closes.
11Paying off early is not foreclosure
You may see an early payoff tool called a "mortgage foreclosure calculator". In India, paying a loan off before its term ends is often called foreclosing the loan, which is why the EMI Calculator and its guide use the word that way.
In the US, foreclosure means something very different: the lender takes action to recover the debt by selling the home, usually after the borrower stops paying. Paying off early is your choice. It closes the loan, and you own the home free of the mortgage.
12Your next step
- Find your original home price, down payment, rate, term and loan start date on your Closing Disclosure, and check your note for a prepayment penalty.
- Open the Mortgage Prepayment & Early Payoff Calculator (US), type them in, and try an amount you can really spare: monthly, yearly, a lump sum or biweekly.
- Compare the Net Saving After Penalties of two or three plans. Starting earlier usually saves more.
- Before you pay, ask your servicer how it applies extra money and biweekly payments, and mark every extra as principal only.
- Keep an emergency fund. Money paid into the loan is hard to get back out.
13Questions people ask
How much does paying $200 extra a month save on a mortgage?
On Sam's $300,000 loan at 6.75 % for 30 years, $200 extra every month from the first payment saves $109,928 of interest and pays the loan off 7 years sooner. Your saving depends on your balance, rate and when you start.
Is paying off a mortgage early the same as foreclosure?
No. In the US, foreclosure is when the lender takes action to recover the debt by selling the home, usually after missed payments. Paying off early is your choice and closes the loan. In India, paying a loan off early is often called foreclosing it, which is why you may see early payoff tools called foreclosure calculators.
Do biweekly payments really help?
Yes. 26 half-payments a year are 13 full payments instead of 12. On Ben's $288,000 loan at 6.5 % that saves $83,766 of interest and 5 years 10 months. Ask your servicer how it applies the half-payments and whether there is a fee.
Is there a penalty for paying off my mortgage early?
Most US mortgages have none. Where federal rules allow one, it is at most 2 % of the amount prepaid in the first two years, 1 % in the third, and none after three years. FHA, VA and USDA guaranteed loans do not allow one, and state law can be stricter. Check your note.
Will paying extra get rid of PMI sooner?
Yes, if you ask. You can ask in writing to cancel PMI once your balance reaches 80 % of the home's original value, and extra payments get you there sooner. The automatic end at 78 % follows the original schedule and does not move.
How do I get my exact payoff amount?
Ask your servicer for a payoff statement in writing. For most home loans it must be sent within 7 business days of a written request. The calculator's payoff amount is a close estimate.
Is a lump sum or a monthly extra better?
Money paid earlier saves more, because interest stops being charged on it sooner. Try both in the calculator and compare the Net Saving After Penalties.
Where do I work out my regular monthly payment?
Use the Mortgage Payment Calculator (US), which adds property tax, home insurance, PMI and HOA dues. Its guide, How to Use the Mortgage Payment Calculator, explains every box.
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