Mortgage Prepayment Penalty Calculator

Calculate mortgage prepayment penalty for early payoff or refinancing.

By Konstantin Iakovlev · Updated April 2026 · Source: CFPB — Owning a Home

$
%
Penalty Type

Penalty Amount

$3,437.50

Per Month Equivalent

$14.32

Penalty Details

Calculation Method3 Months Interest
Remaining Balance$250,000.00
Penalty Amount$3,437.50

Use the Mortgage Prepayment Penalty Calculator above to calculate your results. Enter your values and see instant results — all calculations run in your browser.

Disclaimer: This calculator is for informational purposes only and does not constitute tax, financial, or legal advice. Results are estimates based on the information you provide and current rates. Always consult a qualified tax professional or financial advisor for advice specific to your situation.

How It Works

Paying off a mortgage early or refinancing in 2026 can trigger a prepayment penalty, and estimating that charge upfront tells you whether the move actually saves money. The figure can run into thousands of dollars, which is enough to change whether an early payoff or a new loan makes financial sense at all.

Two methods dominate. One is a fixed percentage of the outstanding principal balance, often tiered, such as 2% in the first year and 1% in the second. The other is a yield maintenance formula, which takes the present value of the gap between your current interest rate and a benchmark rate, like the 10-year Treasury yield that sat around 4.5% in early 2026, applied across the remaining payments.

Your mortgage contract spells out the exact prepayment clause, so read it closely before assuming anything. Borrowers often guess that no penalty applies or misjudge how long the penalty period lasts, both of which can prove costly. Certain loans, FHA and VA among them, generally carry no prepayment penalty at all, which is worth confirming for your own note.

Example: Refinancing a Conventional Loan

  1. 1 Input: Original Loan Amount: $300,000, Original Interest Rate: 6.0%, Loan Start Date: January 1, 2025, Desired Payoff Date: June 1, 2026, Prepayment Penalty Clause: 2% of outstanding balance if paid within the first year, 1% within the second year.
  2. 2 Calculation: By June 1, 2026, you're in the second year of your mortgage. Assuming an outstanding balance of $290,000 at that point, the penalty would be 1% of $290,000.
  3. 3 Result: Your estimated prepayment penalty is $2,900.
  4. 4 Context: This $2,900 penalty needs to be factored into your refinancing costs. If the new loan saves you significantly more than this amount over its lifetime, refinancing might still be a good financial decision.

Source: CFPB — Owning a Home · Last updated: April 2026

Frequently Asked Questions

Do mortgages still have prepayment penalties?
Most conventional and government-backed mortgages originated after 2014 do not have prepayment penalties due to the Qualified Mortgage (QM) rules. However, some non-QM loans, jumbo loans, and commercial mortgages still include them. Always check your loan documents.
How is a mortgage prepayment penalty calculated?
Common methods include a percentage of the remaining balance (typically 1-3%), a sliding scale that decreases over time (e.g., 3% in year 1, 2% in year 2, 1% in year 3), or a set number of months of interest.
Is it worth paying the penalty to refinance?
Compare the prepayment penalty cost to the total interest savings from refinancing over your expected remaining time in the home. If you will recoup the penalty in 2-3 years of lower payments, refinancing is likely worthwhile.

You might also need

Mortgage Calculator 2026 — Payment, Amortization & PMI

Calculate your monthly mortgage payment with taxes, insurance, PMI, and HOA. View full amortization schedule. Free, instant results based on current rates.

FHA Loan Calculator 2026 — MIP, Down Payment & Limits

Calculate FHA loan payments including upfront MIP (1.75%) and annual MIP premiums. See when MIP drops off. Free, instant results based on 2026 FHA limits.

Home Affordability Calculator — How Much House Can You Afford?

Find out how much house you can afford based on income, debts, down payment, and current mortgage rates. Free, instant results with DTI ratio breakdown.