Interest-Only Mortgage Calculator
The payment during an interest-only period, the higher payment after it, and what the interest-only years add to the total interest.
Result
Interest-only monthly payment: $2,166.67
Principal and interest only, at one fixed rate. Taxes, insurance and any rate reset on an adjustable loan are not included.
- Monthly payment after the interest-only period
- $2,982.29
- Rise in the payment
- $815.62
- Total interest
- $575,751.15
- Payment if repaid from the start
- $2,528.27
- Total interest if repaid from the start
- $510,179.81
- Extra interest from the interest-only years
- $65,571.34
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Results are arithmetic from the figures you enter, not legal, tax, lending or settlement advice. Fees vary by state, lender and negotiation, and the site quotes none of them. Check your Loan Estimate, Closing Disclosure or settlement statement for the real numbers. Read the full disclaimer
How to use the Interest-Only Mortgage Calculator
- Enter the loan amount, the interest rate and the full term in years.
- Enter how many years at the start are interest-only.
- Read the interest-only payment, the payment once principal repayments begin, and the extra interest compared with a loan repaid from the first month.
How the payments are found
With a loan amount P, a monthly rate r = annual rate ÷ 12, a term of n months and k interest-only months:
interest-only payment = P × rlater payment = P × r ÷ (1 − (1 + r)^−(n − k))Both are rounded to the cent, and the later schedule charges each month’s interest on the balance to the cent, the same way the loan payment and business loan calculators do. The two pages give the same payments for the same loan.
The payment rise
The rise when principal repayments begin is often called payment shock. It is larger the longer the interest-only period, because the same principal must be repaid in less time. The balance drawing shows why: the line stays flat through the interest-only years, then falls steeply, while the dashed line for an ordinary loan falls from the start.
What is not included
Property tax, homeowners insurance and mortgage insurance, which a lender may collect with the payment. Rate resets on adjustable loans, and loans that allow payments below the interest, where the balance grows.
With your numbers
- Interest-only payment = $400,000.00 × 0.5417% = $2,166.67 for 120 months
- Then $400,000.00 repaid over 240 months = $2,982.29 a month
- Total interest = $575,751.15, against $510,179.81 repaid from the start
Quick reference
Principal and interest only, at one fixed rate. Taxes, insurance and any rate reset on an adjustable loan are not included.
| Example | Interest-only monthly payment |
|---|---|
| 400,000 at 6.5%, 30 years, 10 interest-only | $2,166.67 |
| The same with 5 interest-only years | $2,166.67 |
| 750,000 at 7%, 30 years, 10 interest-only | $4,375.00 |
| 300,000 at 6%, 15 years, 3 interest-only | $1,500.00 |
| 250,000 at 0%, 30 years, 10 interest-only | $0.00 |
| 350,000 at 4.5%, 25 years, 5 interest-only | €1,312.50 |
Common questions about the Interest-Only Mortgage Calculator
- How is an interest-only payment worked out?
- It is one month of interest on the whole balance: the loan amount times the annual rate divided by twelve. On 400,000 at 6.5% that is 2,166.67 a month. None of it repays the loan, so after ten years you still owe the full 400,000.
- Why does the payment rise so much afterwards?
- Because the whole loan must now be repaid in fewer years. After ten interest-only years on a 30-year loan, 400,000 is repaid over 20 years instead of 30, so the payment is higher than it would have been on an ordinary loan from the start, not just higher than the interest-only payment.
- Does an interest-only mortgage cost more in total?
- At the same rate, yes, because the balance stays at its highest for longer and every month’s interest is charged on it. The page shows the extra interest against the same loan repaid from the first month.
- What if my rate changes when the interest-only period ends?
- Many interest-only mortgages are adjustable, and the rate can reset at the same time as repayments start. This page holds the rate fixed. To see a reset, enter the rate you expect after it and compare the later payment.