Mortgage Prepayment Calculator
Prepaying your mortgage is one of the most reliable returns a homeowner can earn — every dollar of interest avoided is essentially a risk-free, after-tax return at your mortgage rate. Enter your balance, rate, and remaining term, then add a monthly extra, a biweekly schedule, or a one-time lump sum to see how much you save and how many years come off the loan.
How is this calculated?
The model amortizes the mortgage month by month using the standard formula, then re-runs the schedule with prepayments applied. Biweekly payments produce 26 half-payments per year, equivalent to 13 monthly payments — one extra per year. Extra principal is applied directly to the balance after interest is calculated, which is the standard treatment for U.S. fixed-rate mortgages with no prepayment penalty (the case for most conforming loans originated since 2014).
Frequently Asked Questions
Are there prepayment penalties on U.S. mortgages?
Most conventional and government-backed loans (Fannie Mae, Freddie Mac, FHA, VA) originated since the post-2014 Dodd-Frank rules carry no prepayment penalty. Non-qualified mortgages and some jumbo or portfolio loans may include penalties for the first 1–3 years. Always check your loan documents before prepaying large amounts.
Should I prepay the mortgage or invest instead?
Compare your mortgage rate to the after-tax expected return elsewhere. With 30-year fixed rates around 6%–7%, prepaying often beats the after-tax return on bonds and rivals long-run equity returns with zero volatility. Don't prepay before maxing out an employer 401(k) match — that's an immediate 100% return.
Does biweekly payment really make a difference?
Yes — substantially. By paying half your monthly amount every two weeks, you make 26 half-payments per year, which equals 13 full monthly payments instead of 12. On a 30-year mortgage, this typically shaves 4–6 years off the term and saves tens of thousands in interest with no change to your monthly cash flow.
How much can prepaying $200 a month save?
On a $300,000 mortgage at 6.5% over 30 years, an extra $200 each month saves approximately $93,000 in interest and clears the loan around 6 years early. Even an extra $100 a month saves around $54,000 and 3.5 years on the same loan.
Last updated: May 2026 · Rates sourced from IRS