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Mortgage Payoff Calculator

Calculate how to pay off your mortgage faster

Mortgage Payoff Formulas
Months to Payoff:
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Interest Savings:
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Payoff Amount:
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Payoff Analysis

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Current Payoff Date
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New Payoff Date
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Time Saved
$0
Interest Saved
Payoff Timeline Comparison
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How to use this payoff calculator

  1. Enter your Current Balance ($) — the remaining principal on the loan today, not the original loan amount. Check a recent mortgage statement or your servicer's portal.
  2. Enter the Interest Rate (%) on your current note. If you have an ARM that hasn't reset yet, use the rate you're paying today, not the start rate.
  3. Enter your Current Monthly Payment ($) — principal and interest only, excluding escrow for taxes, insurance, and PMI. The P&I figure is on your monthly statement.
  4. Enter an Extra Monthly Payment ($) to test ongoing prepayment, and/or a One-Time Extra Payment ($) for a lump sum like a bonus or tax refund.
  5. Click Calculate Payoff to see your current payoff date, new payoff date, time saved, and total interest saved.

Examples

Basic: $200 extra each month on a fresh 30-year loan

A homeowner just closed on a $300,000 mortgage at 6.5% over 30 years. The P&I is about $1,896/month and they want to commit an extra $200 every month from day one.

ResultWithout extras, the loan runs the full 360 months and costs about $382,600 in interest. With $200/month extra, the loan pays off in roughly 295 months — about 5.4 years sooner — and total interest drops to about $304,000, saving close to $79,000.

Each extra $200 is applied directly to principal after the scheduled interest is paid. Because interest is recomputed each month on the new, lower balance, the extra payments compound. The calculator simulates the amortization month by month, stopping when the balance hits zero.

Intermediate: $20,000 tax-refund lump sum at year 5

A homeowner is five years into a 30-year, $400,000 mortgage at 6.0%. The current balance is about $372,500 and they want to apply a $20,000 tax refund directly to principal.

ResultThe lump sum drops the working balance to $352,500. Holding the same $2,398 P&I payment, the loan now pays off in roughly 264 months instead of 300 — about 3 years sooner — and saves roughly $42,000 in remaining interest after subtracting the $20,000 the borrower paid in.

A lump-sum prepayment shortens the loan because every future month's interest is calculated on the smaller post-lump-sum balance. The earlier in the loan you apply it, the bigger the impact: at year 5 you still have 25 years of interest exposure, so the same $20,000 buys back far more interest than it would at year 25.

Edge case: biweekly conversion vs same-dollar monthly extra

A borrower with a $250,000 balance at 5.5% and a $1,419 P&I payment is debating biweekly payments through their servicer (sometimes with a setup fee) versus simply adding 1/12 of a payment — about $118 — to each monthly check.

ResultBiweekly payments of $710 every two weeks total 13 monthly payments per year. Adding $118/month achieves nearly identical math: the loan retires in roughly 304 months instead of 360, saving about $47,000 in interest. The DIY route avoids servicer setup or transaction fees, often $300–$400.

True biweekly programs hold each half-payment in suspense and apply two as a normal payment, with the 27th half-payment hitting principal once a year. A monthly DIY extra payment applied each month is mathematically slightly better than the once-a-year biweekly bonus because principal drops sooner — and there's no third-party fee.

How it works

Given your current balance BB, monthly rate r=annual rate/12r = \text{annual rate}/12, and a payment of PMT=current payment+extraPMT = \text{current payment} + \text{extra}, the calculator solves for the number of months nn using n=ln⁡(PMT/(PMT−B⋅r))ln⁡(1+r)n = \frac{\ln(PMT / (PMT - B \cdot r))}{\ln(1 + r)}. In practice the widget simulates the schedule month by month for accuracy with lump sums and end-of-loan rounding.

Each month, interest equals balance times the monthly rate. Anything you pay above that interest amount comes off principal. Extra principal payments shrink next month's interest, so they have a compounding effect — the earlier they happen, the more total interest they erase.

A one-time lump sum is subtracted from the current balance before the simulation runs, which is how a servicer treats a principal-only payment. The remaining schedule is then computed with the same monthly payment, so the loan ends sooner rather than the payment dropping.

Because the calculator uses the balance and payment you enter today, it implicitly handles loans that are partway through their term. You don't need to enter the original loan amount or origination date — only what you owe now and what you're paying.

When to use this calculator

  • Deciding how much extra to send each month. Try $50, $100, $200, and $500 to see the curve. Most of the interest savings happens in the first few hundred dollars of extra payment — diminishing returns kick in fast.
  • Choosing where to put a windfall. Enter a tax refund, bonus, or inheritance as a One-Time Extra Payment to compare the interest-saved figure with the after-tax return you'd expect from investing the same amount.
  • Comparing biweekly programs against DIY prepayment. Run the equivalent monthly extra (about 1/12 of your P&I) and compare to your servicer's biweekly offer. Often the DIY approach matches or beats it without setup fees.
  • Evaluating a refinance vs prepayment. Estimate the new payment after a refinance and run both scenarios. If the prepayment route saves nearly as much without closing costs, the refinance may not be worth it.
  • Planning toward a target payoff date. If you want to be mortgage-free by a specific year — say, retirement — adjust the extra-payment field until the new payoff date matches your goal.

Common mistakes

  • MistakeEntering the total monthly payment (PITI) instead of just P&I.
    FixOnly enter principal and interest. Property tax, insurance, HOA, and PMI go into escrow and don't affect the loan's amortization. Your statement breaks these out.
  • MistakeUsing the original loan balance instead of the current balance.
    FixPull the current principal from your most recent statement or your servicer's portal. Using the origination amount overstates how much interest is left to pay.
  • MistakeSending extra without specifying 'principal only.'
    FixBy default, many servicers apply extra funds to the next scheduled payment, not principal. Use your servicer's principal-only option or memo line so the extra reduces the balance immediately.
  • MistakeForgetting to check for a prepayment penalty.
    FixMost federally-backed loans originated after January 2014 are penalty-free, but some private, jumbo, or older loans aren't. Search your closing docs or call your servicer before sending a large lump sum.
  • MistakeComparing mortgage payoff to gross stock-market returns.
    FixPaying off a 6% mortgage is a guaranteed, tax-free return. Investment returns are pre-tax and uncertain. Compare to your expected after-tax, risk-adjusted return.
  • MistakeDraining the emergency fund or skipping retirement matching to prepay.
    FixMost planners say keep 3–6 months of expenses liquid and capture every employer 401(k) match first. Prepay with what's left, not what you need.

Frequently asked questions

Is there a penalty for paying off my mortgage early?

Most owner-occupied mortgages originated after January 2014 cannot charge prepayment penalties under CFPB rules for qualified mortgages. Some older, non-QM, jumbo, or investment-property loans can. Check the prepayment section of your note, or ask your servicer for a written payoff quote — it itemizes any penalty.

How do I make sure my extra payment actually goes to principal?

Use your servicer's online portal — most have a dedicated 'principal-only' or 'curtailment' option. If paying by check, write 'apply to principal' on the memo line and include a separate line on the payment coupon. Verify on the next statement that the principal balance dropped by the full extra amount.

Should I pay off my mortgage or invest in retirement?

Capture any employer 401(k) match first — that's an immediate 50%–100% return. After that, compare your mortgage rate to your expected long-term after-tax investment return. If your rate is 7% and your expected return is 6% after tax, prepaying wins. If your rate is 3% and the market is likely to return 7%, investing wins on expected value, though prepayment still offers guaranteed savings and lower retirement expenses.

Is biweekly really better than monthly with the same total?

Mathematically they're almost identical. A true biweekly program makes 26 half-payments per year, which equals 13 monthly payments — one extra. You can replicate this by adding 1/12 of your P&I to each monthly check. The DIY version is marginally better because principal drops 12 times per year instead of once, and you avoid setup or transaction fees from third-party biweekly services.

Recast vs refinance — which is better for prepayment?

A recast (re-amortization) keeps your rate and term but lowers the monthly payment after you make a large principal payment. Fees are usually $150–$500. A refinance replaces the loan, costs 2%–5% in closing costs, and makes sense mainly when rates have dropped. If you have a low rate and just got a windfall, recast. If rates are meaningfully lower, refinance — and consider a shorter term.

Does paying off my mortgage hurt my credit score?

There's usually a small, short-term dip — typically 5–20 points — because closing a long-standing account reduces your credit mix and average account age. The dip is temporary and is not a reason to keep a mortgage. Your score recovers within months as other accounts continue to age.

Can I still deduct mortgage interest after I prepay?

You can deduct interest you actually paid in a given year on up to $750,000 of acquisition debt (loans after Dec 15, 2017), if you itemize. Prepaying simply lowers the interest you'll deduct in future years. With today's higher standard deduction, many homeowners don't itemize anyway. See IRS Publication 936 for the current rules.

Why is my payoff quote higher than my principal balance?

A payoff quote includes principal, accrued interest through the payoff date, any escrow shortage, recording or release fees, and sometimes a per-diem interest charge if you pay between billing cycles. Always request a written payoff statement valid through a specific date before wiring the funds.

Should I pay off my mortgage before retirement?

Many planners favor entering retirement mortgage-free to reduce fixed expenses when income drops. The counter-argument: at a low rate (sub-4%) with steady investment returns, your portfolio may earn more than the mortgage costs. The right answer depends on your rate, tax bracket, withdrawal strategy, and how much peace of mind matters to you.

How accurate is the payoff date this calculator shows?

The simulation assumes the rate and payment stay constant and that each extra payment is applied on time as principal-only. Real life adds rate changes (on ARMs), missed months, recasts, and escrow shortfalls. Treat the date as a strong planning estimate. For an exact figure, ask your servicer for an up-to-date amortization schedule that includes your prepayments.

Will making one extra payment per year really shorten my loan by 5+ years?

On a 30-year loan at typical rates, yes. One extra monthly payment per year applied to principal usually trims 4–6 years off the loan and saves 15%–25% of total interest. The exact figure depends on the rate, how early in the loan you start, and whether the payment hits principal immediately.

What's the difference between this and a regular mortgage calculator?

A standard mortgage calculator helps you size a new loan from a home price, down payment, and term — it answers 'what would my payment be?' This payoff calculator starts from where you are today (current balance, current payment, rate) and answers 'what if I send more, or send a lump sum?' Use the mortgage calculator when shopping for a home and this one once the loan is open.

Sources

Methodology

Given the current balance B, the monthly rate r = annual rate / 12, and a monthly payment PMT (current payment plus any extra), the calculator simulates the amortization month-by-month: interest = B·r, principal = PMT − interest, B ← B − principal. A One-Time Extra Payment is subtracted from B before the simulation starts, mirroring how servicers apply a principal-only curtailment. The number of months until B reaches zero is the new payoff time; the difference vs. the same simulation without extras yields time saved and interest saved. Escrow items (taxes, insurance, HOA, PMI) are excluded because they don't affect amortization.

Learn more about our methodology →

Pro Tips

  • Bookmark this calculator for quick access in the future
  • Use the share button to send your results to others
  • Try different scenarios to compare outcomes
  • Check out our related calculators for more insights

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