What an extra payment actually does
Every mortgage payment first covers the interest that built up on your balance that month. Whatever is left reduces the principal. An extra payment skips the interest step entirely: every dollar lowers the balance, so next month's interest is a little smaller, a little more of your regular payment goes to principal, and the effect compounds until the loan ends early.
That's why small amounts matter more than they look, and why they matter most early in the loan, when the balance, and the interest on it, is largest.
How much you save: worked examples
For a new $300,000 30-year loan at 6.5%, the payment is $1,896.20 and the interest over the full term is $382,637. Here is what common habits do to it:
| Extra payment | Paid off sooner by | Interest saved |
|---|---|---|
| $100 extra a month | 4 yrs | $60,996 |
| $200 extra a month | 6 yrs 11 mo | $103,450 |
| $500 extra a month | 12 yrs 6 mo | $179,762 |
| One extra payment a year | 5 yrs 8 mo | $83,986 |
| $10,000 once, in year one | 2 yrs 8 mo | $52,049 |
Calculated with the same engine as the calculator above. Extra payments start with the first payment.
Before you pay extra, check these
- Prepayment penalties. Most US mortgages today don't have one. Federal rules since 2014 allow them only on certain fixed-rate qualified mortgages, only in the first three years, and capped at 2% of the amount prepaid (1% in year three). Your note or Closing Disclosure will say.
- Where the money goes. Ask your servicer to apply the extra to principal, not to next month's payment. Check the next statement.
- Your other money goals. Many people build an emergency fund, pay off higher-interest debt and take any employer 401(k) match first. Paying down a 6.5% mortgage is a guaranteed 6.5% return; whether that beats investing depends on your situation. Our guide should you pay off your mortgage early? runs the comparison at 6.5% and 3%.
- PMI. If you pay private mortgage insurance, extra principal brings the date you can ask to cancel it closer, so it earns your rate plus the premiums you stop paying. See how to get rid of PMI.
- Taxes. Paying less interest can shrink a mortgage interest deduction, but that only matters if you itemize. Most filers take the standard deduction.
Start from the loan you have today
Most extra payment calculators assume a brand-new loan: the amount you borrowed, a full 30 years, and extras from the first payment. If you're five or ten years in, that overstates what's left to save. This calculator starts from your current balance and your next payment date instead. Enter either the time you have left or the principal and interest part of your payment (leave out escrow), and it works out the other.
Your balance is on your latest statement or your servicer's website. The result is your new payoff month, the interest you still owe with and without the extras, and a year-by-year schedule you can download.
Pick a date, get the payment
Want to be mortgage-free by a birthday, a retirement date or the year your kids start college? Choose "Be mortgage-free by" and pick the month. The calculator works out the smallest extra you'd need to add every month, starting with your next payment, to finish in time. Any yearly extra or lump sum under "More options" is counted first, so the monthly amount shrinks.
For the $300,000 loan above, being done in 15 years instead of 30 takes about $717 extra a month; in 20 years, about $341.
Monthly, yearly or lump sum?
All three work the same way; timing is the only difference. Money paid sooner saves more interest, so $100 every month slightly beats $1,200 once a year. A lump sum early in the loan is the most powerful single move. You can combine all three in the calculator, for example a steady monthly extra plus your tax refund every April.
Extra payments won't lower your monthly payment. A recast will.
On a fixed-rate loan, extra principal shortens the loan but leaves the required payment where it is. If you'd rather have a smaller payment, many servicers will recast the loan after a lump sum: they recalculate the payment on the lower balance over the months you have left, usually for a fee of a few hundred dollars. You save less interest than if you keep paying the old amount, but you gain flexibility. The mortgage recast calculator shows both, and our guide compares recasting with refinancing.
Extra payments on an adjustable-rate mortgage
On an ARM, extra principal works a little differently. When the rate resets, the lender recalculates your payment from the balance you owe on that day and the months left on the loan. So every extra dollar you pay during the fixed period lowers every payment after the reset, and that dollar is never charged the new, higher rate.
Take a $400,000 30-year 5/6 ARM at 6% with 2/1/5 caps, where the rate goes to 7.5% when the fixed period ends. The payment starts at $2,398.20. With no extra, you'd owe $372,218 after five years and the payment would rise to $2,750.66. Paying $300 a month extra brings that balance down to $351,287, so the new payment is $2,595.98, which is $154.68 a month less. Keep the extra going and the loan ends in December 2050 instead of December 2056, and you pay $147,463 less interest.
Because the payment is reset to finish on the original date, extra paid before a reset shows up as a lower payment rather than an earlier payoff. Extra paid after the last reset is what shortens the loan.
This page works as an ARM extra payment calculator too. Open "Rate changes (ARM or rate reset)" above, add the month and new rate for each change, and say whether your payment is recalculated or stays the same. An extra payment calculator with rate changes has to compare like with like, so the "no extra payments" line uses the same rate changes and the interest saved is what your extras alone are worth. To work out the rate path your caps allow, use the ARM calculator.
Questions people ask
How much extra do I need to pay to be mortgage-free by a certain date?
Choose "Be mortgage-free by" in the calculator and pick the month. It finds the smallest extra monthly payment, starting now, that pays the loan off in time, after counting any yearly extra or lump sum you add.
Is it better to make one extra payment a year or a little extra every month?
Paying the same total earlier saves slightly more, because each dollar stops earning interest sooner. $100 a month usually beats $1,200 in December, but only by a small amount. Pick the habit you'll actually keep.
Do extra payments lower my monthly payment?
No. On a standard fixed-rate mortgage your required payment stays the same and the loan simply ends sooner. To lower the payment you'd need a recast (a lump sum plus a fee, if your lender offers it) or a refinance. An adjustable-rate mortgage is the exception: at each reset the new payment is based on the lower balance.
Does this work for an adjustable-rate mortgage (ARM)?
Yes. Open "Rate changes (ARM or rate reset)" and add up to three changes, each with the month it starts and the new rate. Most ARMs recalculate the payment at each change from the balance you owe then, so extra principal paid before a reset lowers every payment after it. The comparison without extra payments uses the same rate changes, so the interest saved is what your extras alone are worth. On a $400,000 5/6 ARM at 6% that resets to 7.5%, $300 a month extra saves about $147,463 in interest.
How do I make sure the extra goes to principal?
Tell your servicer. Most online payment screens have a separate "additional principal" box. Check your next statement to confirm the balance dropped by the extra amount.
Will paying extra help me drop PMI sooner?
Yes. Under the Homeowners Protection Act you can ask your servicer to cancel private mortgage insurance once your balance reaches 80% of the home's original value, and extra payments get you there sooner. Automatic cancellation at 78% follows the original schedule, so you usually need to ask.
Should I pay extra on my mortgage or invest the money?
Prepaying earns exactly your mortgage rate, guaranteed. Investing only comes out ahead if it earns more than that rate after tax and fees, which is likely but not certain over long periods. Cover an emergency fund, any employer retirement match and high-interest debt first. Our guide on paying off a mortgage early walks through the comparison.
Can I use this for a loan I've had for years?
Yes. Enter the balance from your latest statement, your rate, and either the time left or your principal and interest payment. The calculator starts from that point instead of from the day you borrowed.
Why is my result a few dollars different from my lender's?
We round the payment and each month's interest to the cent, like a servicer. Lenders can differ in rounding, in the day you pay, or by charging interest daily. See How we calculate for details.
How this calculator works
Interest each month is your balance times the annual rate divided by 12, rounded to the cent. Your scheduled payment pays that interest first; the rest, plus any extra, reduces the balance. Extra payments are credited after that month's payment, so they lower interest from the next month. Taxes, insurance and PMI are not included. If you add rate changes, the payment is recalculated at each one over the months left (or kept the same, if you choose that), and the comparison without extras uses the same changes. The full method, with formulas, is on How we calculate.
Related calculators and guides
- Principal vs interest crossover: the month your payment becomes mostly principal.
- PMI removal calculator: when you can drop mortgage insurance, and how extras speed it up.
- Pay extra vs invest: whether the money would do more in the market.
- Should you pay off your mortgage early?
This calculator is for education and estimates only. It isn't financial advice, and your servicer's figures are final. Results depend on the numbers you enter.