Mortgage Prepayment Penalty Calculator
Some mortgages charge a penalty if you pay off or refinance early. This calculator estimates the cost using the two most common formulas: a percentage of the balance or a set number of months of interest.
How this calculator works
Two penalty structures dominate. A percent-of-balance penalty simply multiplies your remaining balance by a stated percentage — typically 1% to 3% — sometimes declining each year. A months-of-interest penalty charges the equivalent of a set number of months of interest on your balance at your current rate. This calculator supports both. Prepayment penalties appear mainly on non-qualified mortgages, jumbo loans, and some investment-property loans; most conforming mortgages have none.
Frequently asked questions
Do most mortgages have prepayment penalties?
No. Loans that qualify for Fannie Mae or Freddie Mac purchase — most standard conforming mortgages — cannot include a prepayment penalty. You are most likely to see them on jumbo loans, non-QM loans, and some subprime or investment-property financing.
How long do prepayment penalties last?
When they exist, penalties typically apply only during the first two to three years of the loan, and the amount usually declines over time. Check your note or the Loan Estimate you received at closing for the exact terms.
Are prepayment penalties legal?
Yes, but regulated. Under Dodd-Frank, penalty terms must be disclosed on the Loan Estimate and Closing Disclosure, and lenders may not impose them on most qualified mortgages. A handful of states ban them outright.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.