Mortgage curtailment, making extra principal payments, is a powerful strategy to save on interest and pay off your home faster. This method works for every borrower, regardless of loan type, including FHA, VA, and Conventional loans, as none have prepayment penalties. Curtailment builds equity, shortens your loan term, and for conventional loans, can even help eliminate PMI sooner or allow recasting to lower payments.
In this guide, we’ll explore:
- What curtailment means
- How it applies to FHA, VA, and Conventional loans
- Tips to maximize savings
- Differences between curtailment and refinancing
- Tools, calculators, and strategies to help you take action
Let’s start by understanding the basics.
What Is Mortgage Curtailment?
Curtailment means making extra payments directly toward your mortgage principal, reducing your loan balance faster than scheduled.
There are two primary forms:
- Lump-Sum Curtailment – A one-time extra payment (like from a bonus or tax refund).
- Monthly Curtailment – Adding a fixed amount to your monthly mortgage payment regularly.
Why Curtailment Matters
Interest on your mortgage accrues based on the unpaid principal balance. Reducing that balance early means:
- Paying less interest overall
- Building equity faster
- Possibly paying off your mortgage years earlier
Unlike refinancing, curtailment doesn’t require credit checks, closing costs, or paperwork. It’s simple and powerful.
Curtailment Across Loan Types
FHA Loans (Federal Housing Administration)
FHA loans are government-backed loans with low down payments and more lenient credit requirements—popular among first-time buyers.
Can You Curtail an FHA Loan?
Yes, you can! FHA allows you to make extra payments without penalty.
Key Considerations:
- Prepayment Penalty? ❌ No
- PMI Savings? ❌ Not really. FHA loans require MIP (Mortgage Insurance Premium) for at least 11 years, or for the life of the loan if your down payment is less than 10%.
- Recasting Option? ❌ Rare with FHA lenders
- Monthly Payment Reduction? ❌ No automatic change unless you refinance
- Best Time to Curtail: In the early years of the loan when interest costs are highest
VA Loans (Veterans Affairs)
VA loans offer exceptional benefits to eligible military service members and veterans—including no down payment and no PMI.
Can You Curtail a VA Loan?
Yes, absolutely! VA loans allow prepayments at any time.
Key Considerations:
- Prepayment Penalty? ❌ No
- PMI Savings? ✅ Not applicable (VA loans don’t require PMI)
- Recasting Option? ❌ Not typically offered
- Best Use: To reduce interest and shorten the loan term
Example:
Loan: $300,000 VA loan at 6.5% over 30 years
Monthly extra payment: $200
Savings: ~$63,000 in interest and 7 years off the loan term
🔧 Pro Tip: Making even $100/month extra can add up to major savings over time.
Conventional Loans
Conventional loans are not government-backed and are widely used by both first-time and repeat homebuyers.
Can You Curtail a Conventional Loan?
✅ Yes—and with the most flexibility.
Key Considerations:
- Prepayment Penalty? ❌ Rare today (always confirm with your lender)
- PMI Savings? ✅ Yes! Curtailing can help you reach 80% LTV faster and remove PMI early
- Recasting Option? ✅ Often available (lower monthly payments after curtailment)
- Monthly Payment Reduction? ✅ If you recast your loan after a large curtailment
- Best Use: Flexible strategy—reduce interest, remove PMI, or lower monthly payments
Side-by-Side Comparison
Feature |
FHA Loan |
VA Loan |
Conventional Loan |
| Curtailment Allowed | ✅ Yes | ✅ Yes | ✅ Yes |
| Prepayment Penalty | ❌ No | ❌ No | ❌ Rare |
| PMI/MIP Impacts | ❌ Limited (MIP stays) | ✅ N/A | ✅ Ends PMI sooner |
| Recasting Option | ❌ Rare | ❌ Rare | ✅ Often allowed |
| Best Use Case | Save interest only | Shorten term | Save interest + lower payments |
How to Make Curtailment Work for You: Step-by-Step
1. Contact Your Lender First
Ask these questions:
- Can I make extra payments toward the principal?
Is there a prepayment penalty? - Do you require a special process to apply payments correctly?
- Is loan recasting an option after a large payment?
2. Specify “Apply to Principal”
When paying:
- Use your online portal, check, or mobile app
- Choose “Apply to Principal Only”
- Keep confirmation receipts!
3. Set a Monthly Curtailment Budget
Even $50–$200/month makes a difference:
- $100/month extra on a $250,000 loan at 6.5% could save over $40,000 in interest
4. Consider Lump-Sum Payments
- Use tax refunds, bonuses, or side income
- Try to make lump-sum curtailments early in the loan term
Real-World Impact of Monthly Curtailment
Loan Details
- Amount: $275,000
- Interest: 6.5%
- Term: 30 years
- Base Monthly Payment (P&I): ~$1,740
Monthly Curtailment: $150/month
New Total Monthly Payment: $1,890
Result:
- Interest savings: $48,000+
- New loan term: 25 years
- Years saved: 5 years
Frequently Asked Questions
Can I curtail if I have an escrow account?
Yes. Curtailment affects principal, not escrow. Your taxes and insurance are unaffected.
Does curtailment affect my credit score?
No. In fact, building equity and reducing debt may improve your credit profile over time.
Is recasting the same as refinancing?
No. Recasting adjusts your monthly payment after a curtailment; refinancing replaces your loan entirely.
Can I remove PMI early by curtailing?
Yes! If you reach 80% LTV, you may request PMI cancellation on conventional loans.
Final Thoughts:
No matter what kind of loan you have—FHA, VA, or Conventional—making extra payments (curtailment) is an easy way to pay off your mortgage faster. It gives you more control, helps you save money on interest, and you don’t have to go through the hassle of refinancing.