How Curtailment Can Reduce Your Mortgage Balance Faster?
July 31, 2025
8 minutes
Let’s face it: most borrowers dream of paying off their mortgage early, but few realize just how easy (and impactful) it can be. If you're like many homeowners, you're tired of watching most of your monthly payment go to interest. Here's the good news: Mortgage curtailment can flip the script and save you thousands over the life of your loan.
Curtailment simply means making extra payments directly toward your principal balance, outside of your regular mortgage payment. No refinancing. No gimmicks. Just a smart strategy.
Heads up: This works for every borrower, not just VA or FHA. Whether you're financing a condo in Cleveland or a craftsman in Colorado, this guide will show you how to use curtailment to take control of your mortgage.
Key Takeaways:
- Curtailment refers to extra payments applied directly to your mortgage principal.
- You can significantly reduce interest paid and the loan term without refinancing.
- Works for all types of borrowers and loan products.
- Not all servicers apply curtailments the same way_ask before you pay.
What Is Mortgage Curtailment?
Curtailment is an extra payment made toward your loan principal, beyond your scheduled monthly mortgage payment. This reduces the total balance owed, which in turn reduces future interest payments, because interest is calculated on a smaller balance.
Types of Curtailments:
- Recurring Curtailment: Adding a fixed amount to every monthly payment.
- Lump-Sum Curtailment: One-off extra payments (e.g., from a tax refund or bonus).
Example:
If you owe $300,000 and make a $5,000 curtailment early in your loan term, you could save over $10,000 in interest and shorten your loan by several months or even years (source: Consumer Financial Protection Bureau).
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Why Curtailment Works for Every Borrower?
No matter your loan type, conventional, jumbo, HELOC, or Non-QM, curtailment is universally effective. That’s because it targets principal, not your monthly payment schedule.
Benefits Include:
- Faster equity buildup
- Reduced lifetime interest
- Earlier payoff date
- No need to refinance (which can incur costs and credit checks)
Pro Tip: Call your loan servicer before making a curtailment. Confirm that the extra payment will go directly to the principal, not escrow or future payments.
How to Set Up a Curtailment Plan?
Want to turn this into a habit? Follow these steps:
- Review Your Amortization Schedule – Know how much is going toward interest.
- Set Curtailment Goals – $100/month or one extra payment per year.
- Automate Where Possible – Set recurring principal payments.
- Use Windfalls – Tax refunds, bonuses, or side hustle income.
- Track Your Progress – Use a mortgage calculator app.
Common Questions from Real Borrowers
Borrowers on Reddit and Quora often ask:
Will my monthly payment decrease if I curtail?
No. Your scheduled payment stays the same unless you refinance. Curtailment shortens your loan term or reduces total interest.
How often should I make curtailments?
As often as you comfortably can. Even once a year helps.
Can I make curtailments on fixed-rate and adjustable-rate loans?
Yes. Just ensure the servicer applies extra funds toward principal.
Tools and Resources to Maximize Curtailment
- reAlpha Mortgage: Personalized mortgage planning and support with rebate-boosted savings. NMLS #1743790.
- Mortgage Payoff Trackers & Amortization Calculators
- CFPB’s Consumer Guides on Prepayment Rights
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FAQs
What’s the difference between curtailment and prepayment?
They’re nearly identical. Curtailment is a type of prepayment specifically aimed at reducing the loan principal, often used interchangeably.
Do all lenders accept curtailments?
Most do, but not all apply payments the same way. Always confirm with your servicer.
Can I curtail on a government-backed loan?
Yes. FHA, USDA, and even conventional loans support curtailments, but rules vary.
Is there a penalty for curtailment?
Federal law (TILA) generally prohibits prepayment penalties on most residential loans. Check your loan documents or ask your lender.
Required Disclosures:
This content is for informational purposes only and does not constitute financial advice. All loans are subject to credit and underwriting approval. Not all borrowers will qualify. reAlpha Mortgage, NMLS #1743790, is an Equal Housing Lender. Licensed to offer loan products with smart rebate integrations through the reAlpha platform. For full licensing and disclosure information, visit the NMLS Consumer Access portal.
Always consult with a licensed mortgage professional before making loan decisions.
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Article by
Rocky Billore is a mortgage industry leader and Chief Sales Officer with over two decades of experience across residential and commercial lending. Since entering the industry in 2004, he has been directly involved in funding more than $1.4 billion in loans. A recognized expert in VA and government lending, Rocky combines deep program knowledge with a data driven, relationship-first leadership style. His work focuses on building scalable sales organizations, developing high performing teams, and aligning technology with real world lending outcomes to improve the homeownership experience.