Your result
What your result means
Your required payment is $1,896.20. Paying $2,096.20 instead — an extra $200 straight to principal — clears the $300,000 balance in 23 years 1 month instead of 30 years. That saves 6 years 11 months of payments and $103,450 in interest, because each extra dollar stops collecting 6.5% interest for the rest of the loan.
The math
Formula and sources
Without extra: pay M each month until balance = 0 With extra: pay M + E each month (E goes entirely to principal) Interest saved = total interest(M) − total interest(M + E)
- M
- monthly principal-and-interest payment
- E
- extra principal each month
- P
- amount borrowed (price minus down payment)
- r
- monthly interest rate = annual rate ÷ 12
- n
- number of monthly payments = years × 12
Both schedules are simulated month by month with interest rounded to the cent. Ask your servicer to apply extra money to principal, not to next month’s payment.
Sources we checked this against
- 1A Consumer's Guide to Mortgage RefinancingsFederal Reserve Board · federalreserve.gov
- 2Loan Estimate sample H-24(B), fixed-rate loanConsumer Financial Protection Bureau · files.consumerfinance.gov
- 3PMT function (payment formula and examples)Microsoft Support · support.microsoft.com
Formula last checked 2026-11-04. Found an error? Tell us and we will fix it.
Step by step
Two worked examples
Federal Reserve example: +$50 a month
Payment with extra
$1,249.10
- Current loan balance
- $200,000
- Interest rate
- 6%
- Years remaining
- 30 years
- Extra principal per month
- $50
The Fed’s refinancing guide says adding $50 a month to a $200,000, 6%, 30-year loan cuts about three years and saves more than $27,000. Our schedule agrees: payoff in 27 years instead of 30 years, saving $27,880.
Same loan, +$300 a month
Payment with extra
$1,499.10
- Current loan balance
- $200,000
- Interest rate
- 6%
- Years remaining
- 30 years
- Extra principal per month
- $300
Raising the extra to $300 makes the payment $1,499.10. The loan is gone in 18 years 5 months, 11 years 7 months early, and interest saved climbs to $101,106.
| Result | Example 1 | Example 2 |
|---|---|---|
| Payment with extra | $1,249.10 | $1,499.10 |
| New payoff time | 27 years | 18 years 5 months |
| Interest saved | $27,880 | $101,106 |
Questions
Frequently asked questions
Is it better to pay extra or invest the money?
Extra principal earns a guaranteed return equal to your loan rate. Investing may earn more over long periods but with risk. Many people first build an emergency fund and capture any employer retirement match, then compare their mortgage rate with expected after-tax investment returns.
Will my monthly payment go down if I pay extra?
No. On a standard fixed-rate mortgage the required payment stays the same; the loan simply ends sooner. Some lenders offer a paid recast that lowers the payment after a large lump sum.
Are there prepayment penalties?
Most U.S. home loans made today have none, but some do in the first few years. Check the “Prepayment Penalty” line on your Loan Estimate or Closing Disclosure.
Does a one-time lump sum work the same way?
A lump sum also lowers the balance and every later interest charge. This calculator models a steady monthly extra; for a lump sum, reduce the loan balance by that amount and compare.