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Mortgage

Buying your first home is exciting, but taking on a 30-year mortgage can feel overwhelming. The good news? You don’t have to stay locked into your loan for three decades. With a few smart strategies, you can pay off your mortgage faster without putting a strain on your budget.

If you’re a first-time homebuyer, here’s how you can set yourself up for financial freedom sooner.

1. Choose the Right Loan from the Start

If you haven’t bought your home yet, consider opting for a shorter loan term if it’s financially possible.

• A 15-year mortgage has higher monthly payments but saves thousands in interest over time.

• If a 15-year loan isn’t within your budget, a 30-year mortgage with no prepayment penalties allows flexibility to make extra payments when you can.

2. Set Up Biweekly Payments

Instead of making one monthly mortgage payment, split it into two half-payments every two weeks. This simple change adds up to one extra payment per year, reducing your loan term by several years.

Example: On a $250,000 mortgage at 6% (30 years), biweekly payments can save over $60,000 in interest and cut about 4 years off your loan.

3. Round Up Your Monthly Payment

An easy way to chip away at your loan is to round up your mortgage payment each month.

• If your payment is $1,450, round it up to $1,500 or more.

• Even an extra $25 or $50 per month can shorten your loan term.

4. Make One Extra Mortgage Payment Per Year

If biweekly payments don’t work for you, commit to one extra full payment each year.

• You can save a little each month (1/12 of your payment) and apply it at year-end.

Example: If your monthly mortgage payment is $1,500, setting aside $125 per month lets you make an extra $1,500 payment per year, cutting years off your loan.

5. Use “Found Money” to Pay Down Your Mortgage

As a first-time homebuyer, your budget may be tight, but you may receive occasional windfalls, such as:

• Tax refunds
• Year-end work bonuses
• A raise at work
• Cash gifts from family

Instead of spending that money on unnecessary purchases, apply it toward your mortgage principal. Even a $1,000 lump-sum payment once a year can make a big difference over time.

6. Avoid Lifestyle Creep After Buying Your Home

Many first-time homebuyers stretch their budget just to afford a home. Once you settle in, avoid upgrading your lifestyle too quickly.

• Instead of buying new furniture on credit or financing a car, focus on making extra mortgage payments.
• Any extra cash flow you gain (like from a promotion or side hustle) can go toward your mortgage instead of lifestyle expenses.

7. Apply Savings from a Paid-Off Debt

If you finish paying off a car loan, student loan, or credit card, keep making that same payment but apply it toward your mortgage instead.

Example: If you pay off a $250 monthly car loan, adding that to your mortgage payment can cut years off your loan without affecting your budget.

8. Check for Prepayment Penalties

Most modern home loans don’t have prepayment penalties, but some do, especially if you took advantage of special financing or assistance programs. Check with your lender to make sure you can make extra payments without fees.

Final Thoughts

Paying off your mortgage early is possible even as a first-time homebuyer. Making small, consistent extra payments can save you thousands in interest. The key is to start early and stay consistent – even small changes can make a big impact over time.

To see how much you can save, use our simple Prepayment Savings Calculator.

Meet the author

A little about Kristi Thurmon

Kristi was raised in the Natural State and has lived most of her life in Searcy. She enjoys traveling, reading, drinking girly coffee, taking sewing classes at Make.Do. and volunteering for Main Street Searcy. Otherwise, she is managing OnlyInArk.com and marketing at First Security Bank.

Read more stories by Kristi Thurmon