Mortgage Calculator with Extra Payments
Discover how much you can save by making extra principal payments on your mortgage
Extra Payment Savings Calculator
How Extra Payments Work
Making extra principal payments on your mortgage is one of the most effective ways to save money and build equity faster. Unlike regular monthly payments that are split between principal and interest, extra payments go directly toward reducing your principal balance.
1. Reduces Principal
Extra payments reduce your outstanding principal, which means less interest accrues over time.
2. Lowers Total Interest
With a smaller principal balance, you pay less interest over the life of the loan.
3. Shortens Loan Term
Paying more each month means you'll own your home free and clear sooner.
4. Builds Equity Faster
Extra payments increase your home equity, giving you more financial flexibility.
Example: $320,000 Mortgage at 6.5%
| Scenario | Monthly Payment | Total Interest | Loan Term |
|---|---|---|---|
| Standard 30-Year | $2,080 | $328,800 | 360 months |
| + $100 Extra/Month | $2,180 | $283,200 | 324 months (27 years) |
| + $200 Extra/Month | $2,280 | $241,200 | 294 months (24.5 years) |
| + $500 Extra/Month | $2,580 | $156,000 | 192 months (16 years) |
Frequently Asked Questions
How do extra payments affect my mortgage in 2026?
As of 2026, extra payments directly reduce your principal balance, which decreases total interest and shortens your loan term. With rates around 6.5-7.5%, extra payments provide a guaranteed return equal to your mortgage rate.
Should I make extra principal payments?
Extra principal payments are generally beneficial if you have extra cash and no high-interest debt (above 7-8%). They provide a guaranteed return equal to your mortgage interest rate and help build equity faster.
Is there a penalty for making extra payments?
Most modern mortgages allow prepayment without penalty, but it's important to check your loan documents. Some older loans or specialized mortgages may have prepayment penalties.
What's better: extra monthly payments or a larger down payment?
Both strategies reduce interest costs. A larger down payment lowers your monthly payment and total interest from day one. Extra payments provide flexibility and can be adjusted based on your financial situation.
How much can I save with extra payments in 2026?
With current rates around 6.5-7.5%, an extra $200/month on a $300,000 loan can save $50,000-$70,000 in interest and shorten the term by 5-7 years.
How often should I make extra payments?
Even small, consistent extra payments work best. $50-$100 extra per month can save thousands over time. One-time lump sums when you receive bonuses also help.
Do extra payments go to principal or interest?
Extra payments typically go directly to principal, reducing the amount of interest that accrues. Be sure to specify "apply to principal" when making extra payments.
Can I make extra payments on an FHA or VA loan?
Yes, both FHA and VA loans allow extra principal payments without penalty. This helps you build equity faster and pay off the loan sooner.
What if I lose my job after making extra payments?
Extra payments reduce your principal, so your required monthly payment stays the same but your overall balance is lower. This gives you more flexibility if your income changes.
Should I pay extra principal or invest the money?
If you can earn a higher after-tax return investing than your mortgage rate, investing may be better. Otherwise, extra principal payments guarantee a risk-free return equal to your mortgage rate.