How to Pay off a 30-Year Mortgage in 15 Years Without Really Feeling It Want to own your home by the middle of the next decade, but can't handle the monthly payments on a 15-year mortgage right now? Try applying the "Three Percent Rule" to your 30-year mortgage. Here's how it works: You make your regular monthly payments for the first year of the loan. At the beginning of the second year, you take an amount equal to three percent of the monthly principal and interest portion of your bill (it's itemized on your statement), and include it as additional principal with each payment for that year. Repeat the procedure for each subsequent year, and in about 15 years you own your home. As an example, consider a $100,000, 30-year loan at 7.25 percent: MONTHLY INTEREST/ PRINCIPAL 3% ADDITIONAL PAYMENT TOTAL MONTHLY PAYMENT 1ST YEAR: $682.18 — $682.18 2ND YEAR: $682.18 $20.47 $702.65 3RD YEAR: $702.65 $21.08 $723.73 And so on. In effect, you're giving your lender an "annual raise" of three percent — likely less than the cost of living. And the reward is full ownership of your home in about half the time called for by the term of your mortgage!