Mortgage Payoff Calculator

Background.

On a $350,000 mortgage at 6.5 percent with 30 years to run, the first monthly payment of $2,212.24 sends $1,895.83 of it — about 86 percent — to interest. Each extra dollar of principal paid early comes off the balance that every later month's interest is charged on, so the saving repeats every month until the loan is gone. That is why modest extra payments shorten a long loan by years: adding $250 a month to that mortgage from the first month retires it in 273 months instead of 360 and cuts the total interest by $126,603.98.

Enter today's balance, the note rate and the years remaining, then any extra principal — a recurring amount, a one-time lump sum, or both — and the month the extras begin. Two month-by-month schedules run side by side, one with the regular payment only and one with your additions, and you get the payoff time and total interest of each and the difference between them. Only principal and interest on a fixed-rate, fully amortizing loan are modeled. Property-tax and insurance escrow, mortgage insurance, servicer fees and any prepayment penalty sit outside the arithmetic, so the result is the interest your extra principal avoids, not the full effect on your monthly budget.

What is mortgage payoff calculator?

A mortgage prepayment is any money paid toward principal beyond the scheduled amount. Each regular payment covers that month's interest on the outstanding balance first, and whatever remains reduces the principal. Because the payment on a fixed-rate loan stays the same, a smaller balance means less of each later payment goes to interest and more to principal, and the balance reaches zero sooner. The required payment does not fall unless the lender formally recasts the loan. Left to the regular schedule, the shift from interest to principal is slow: on a $350,000 loan at 6.5 percent over 30 years, the principal share of the payment first overtakes the interest share in month 233, nearly 20 years in, and the balance does not fall to half its starting level until month 257. Extra principal pulls both of those points forward. In effect, every dollar prepaid earns the loan's interest rate, with certainty, in the form of interest you no longer owe. The balance on your statement is not the same as a payoff amount: the Consumer Financial Protection Bureau notes that a payoff figure also includes interest accrued since your last payment and any fees owed through the payoff date, which is why the two numbers differ.

How to use this calculator.

1. 01Enter the principal balance from your latest statement — the outstanding principal, not a payoff quote, which includes accrued interest and fees.
2. 02Enter the interest rate on your note rather than the APR. The APR spreads points and certain fees over the loan as a yearly cost; your monthly interest is charged at the note rate.
3. 03Enter the years left on the schedule: five years into a 30-year loan, enter 25. The baseline assumes your regular payment is exactly the one that clears today's balance over that term, so if you have prepaid before and your payment is now larger than that, your real payoff is already sooner than the original figure shows.
4. 04Enter the extra amount per month and choose how often it is paid. Quarterly bundles three months' worth into every third month and annually bundles twelve months' worth into every twelfth, so $250 becomes $750 a quarter or $3,000 a year.
5. 05Enter any one-time payment and the start month. The lump sum is applied at the start of that month, before its interest is charged, and recurring extras begin in the same month; month 1 means right away.
6. 06Read the months as years by dividing by 12: 264 months is 22 years. Months saved and interest saved compare the two schedules directly.

The formula.

The regular payment is the standard amortizing-loan formula: P = L × r(1 + r)ⁿ ÷ [(1 + r)ⁿ − 1], where L is today's balance, r is the annual rate divided by 12 and n is the remaining months. It is the level payment whose present value at rate r equals the balance.

From there both schedules are built one month at a time. Interest for the month is the opening balance times r. Principal is the payment minus that interest. In the accelerated schedule, any extra due that month is added to the principal, capped at what is left, and the balance falls by the total. A lump sum, if you entered one, comes off the balance at the start of its month, before interest is worked out. The loop stops when the balance reaches zero, so the last month only collects what is owed, and stray fractions of a cent are cleared rather than carried into an extra month.

An iterative schedule is used because the extras are irregular. With a constant extra every month from month 1, the formula can be rearranged to solve for n directly; once you add a lump sum, a delayed start or quarterly bundles, stepping through the months is the only exact approach, and it matches the way a servicer's ledger works.

The interest rate sets how much each prepaid dollar is worth, since it decides how much interest that dollar would otherwise have collected every month until payoff. The same $250 a month that saves $126,603.98 on the $350,000 loan at 6.5 percent saves $42,344.79 at 3 percent.

A real servicer differs in small ways. Payoff quotes count interest by the day, some loans accrue interest daily rather than monthly, and the exact date a payment posts can shift results by a few dollars. An adjustable-rate loan only matches until its rate resets — rerun it with the new rate and balance after each adjustment.

A worked example.

Frequently asked questions.

References& sources.

1. [1]CFPB (2023). "What is a payoff amount? Is my payoff amount the same as my current balance?" Consumer Financial Protection Bureau.
2. [2]Federal Reserve Bank of New York (2024). "Household Debt and Credit Report." Center for Microeconomic Data, Q3 2024.
3. [3]IRS (2023). "Publication 936: Home Mortgage Interest Deduction." Internal Revenue Service.
4. [4]CFPB (2013). "Ability-to-Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)." Federal Register 78(20): 6408.
5. [5]HUD (2023). "Single-Family Housing Policy Handbook 4000.1." U.S. Department of Housing and Urban Development.
6. [6]Fannie Mae (2024). "Selling Guide: Prepayment Penalties." Fannie Mae Single-Family.