Calculator
Pay off the mortgage or keep it in a HYSA?
Compare putting extra money toward your mortgage with keeping it in a high-yield savings account. See the savings rate after taxes, the break-even APY, and the dollar difference after 1, 5, and 10 years, including what happens if savings rates fall.
By Rateboard Editors · Last reviewed October 6, 2026
Prefilled with the latest 30-year survey average (7.40%, Freddie Mac, week ending Oct 15, 2026). Enter your own loan's rate. It's on your mortgage statement.
Your top 2026 federal bracket. Not sure? The paycheck calculator shows it. Single: over $50,400 up to $105,700. Married filing jointly: over $100,800 up to $211,400.
Savings APY from month 13: 4.30%.
At these inputs, paying down the mortgage comes out $7,290 ahead after 10 years
Regular payment $2,197.50.
After-tax savings yield 3.14% (3.139%) vs effective mortgage rate 7.40%.
Break-even savings APY 10.14% (10.137%).
1, 5 and 10 years
| After | Prepay path: mortgage balance | Savings path: mortgage balance | Savings path: savings balance (after tax) | Difference |
|---|---|---|---|---|
| 1 year | $284,920 | $295,686 | $10,314 | Prepay +$452 |
| 5 years | $260,402 | $274,862 | $11,671 | Prepay +$2,790 |
| 10 years | $217,599 | $238,511 | $13,622 | Prepay +$7,290 |
Prepaying $10,000 saves about $48,391 in interest over the life of the loan and pays it off 26 months sooner (no recast).
Savings: 4.30% APY, top surveyed high-yield savings (June surveys). Mortgage: 7.40%, Freddie Mac 30-year average, week ending Oct 15, 2026.
Before you decide: liquidity
Money sent to your mortgage is hard to get back. You can't withdraw it, and borrowing against home equity takes time, approval, and fees. Cash in an FDIC-insured savings account stays available for emergencies. A smaller payment only comes with a recast, so prepaying alone doesn't lower your monthly bill. Savings rates are variable and can fall at any time, while a fixed mortgage rate doesn't change.
Educational estimate, not financial, tax, or legal advice. Results depend on your inputs and simplified assumptions: taxes at your marginal rate, interest taxed in the year earned, a fixed-rate loan, and no prepayment penalty. Your situation may differ.
How this comparison works
Every extra dollar on a mortgage earns the loan's interest rate, with no market risk, by avoiding interest that would otherwise be charged. A dollar in savings earns the APY minus taxes on the interest. Compare the two rates, after tax, on the same basis. This page then sends the same cash out each month on both paths and shows the dollar gap after 1, 5, and 10 years.
Savings interest is taxed as ordinary income, federal and usually state. The after-tax yield is the APY multiplied by one minus the combined tax rate. Mortgage interest lowers taxes only for people who itemize, and then only at their federal bracket. The break-even APY folds both together. It is the savings rate whose after-tax yield matches the effective mortgage rate: divide that rate by one minus the combined tax rate.
High-yield savings rates float with the Fed's policy rate. A fixed mortgage rate doesn't move. The slider lowers the savings APY after month 12, and the 5-year and 10-year rows show how that drop changes the gap. Read more on why high-yield savings rates change.
Some servicers re-amortize the loan after a lump sum for a fee. That recast lowers the monthly payment and keeps the same end date. The calculator puts the difference between the old payment and the new one into savings, so the paths still spend the same cash each month.
Money in the house can't pay a surprise bill. Many households keep three to six months of essential expenses in cash before prepaying. The optional check counts those months before and after a lump sum. The emergency fund guide explains that range.
Worked example, which matches this calculator: on a $300,000 balance at 7.40% with 25 years left, $10,000 toward the loan comes out about $7,290 ahead of $10,000 in savings at 4.30% APY after 10 years, for someone in the 22% federal bracket with 5% state tax who doesn't itemize. At a 3.00% mortgage rate, the same $10,000 in savings comes out about $128 ahead instead, unless savings rates drop.
Other things the calculator doesn't model:
- prepayment penalties (rare on most current loans, check your note)
- PMI that could end sooner
- retirement-account matches
- higher-interest debts
- adjustable-rate loans
Educational estimate, not financial, tax, or legal advice. Results depend on your inputs and simplified assumptions: taxes at your marginal rate, interest taxed in the year earned, a fixed-rate loan, and no prepayment penalty. Your situation may differ.
Common questions
- Is it better to pay off my mortgage or keep money in a high-yield savings account?
- It depends mostly on two numbers: your mortgage rate and the savings APY after taxes. If the after-tax APY is below your mortgage rate, prepaying usually comes out ahead in dollars. If it's above, savings does. Liquidity matters too, since money paid into the house is hard to get back. This calculator shows both sides and isn't financial advice.
- What is the break-even savings rate?
- It's the APY at which a savings account's after-tax interest matches your mortgage rate. Divide the mortgage rate by one minus your combined tax rate. At 7.40% with a 27% combined rate, that's about 10.14%. At 3.00%, it's about 4.11%.
- How are savings account interest and mortgage interest taxed?
- Savings interest is taxed as ordinary income, federally and in most states. Mortgage interest is deductible only if you itemize, and then the benefit is roughly your federal bracket times the interest. Most households take the standard deduction, so the calculator leaves that toggle off by default.
- What happens if high-yield savings rates go down?
- Savings rates are variable and tend to follow the Fed's policy rate, while a fixed mortgage rate stays put. Use the slider to lower the savings APY after the first year and see how the 5- and 10-year results change.
- Does paying extra lower my monthly mortgage payment?
- Not by itself. Extra principal shortens the loan but the payment stays the same. A recast, which some servicers offer for a fee after a lump sum, re-amortizes the balance and lowers the payment while keeping the payoff date.
- How does an emergency fund fit in before paying down a mortgage?
- Many guides suggest three to six months of essential expenses in cash, because money in your home isn't easy to reach. The optional emergency-fund check shows how many months of expenses you'd have left after a lump-sum payment.
- What savings rate does this calculator use?
- By default, the top surveyed high-yield savings rate on the desk (4.30%; range 4.21–4.40% in June surveys). You can switch to the top-5 online average (3.14%, Sept. 16), the FDIC national averages, or type your own APY.
Related tools
- Compound interestGrowth of a lump sum plus monthly deposits at the latest APYs.
- Mortgage paymentPrincipal, interest, taxes, insurance, HOA, and PMI from the latest 30-year average.
- Stay or refinanceHonest verdict if you locked near 3% versus the latest 30-year average.
- Paycheck / take-home2026 IRS brackets, FICA wage base, and a simple state tax.