# Interest-Only Mortgage Calculator

URL: https://speedycalculator.com/calculators/finance/interest-only-loan/
Last updated: 2026-10-25

> The interest-only mortgage calculator works out the payment during the interest-only period, the higher payment once principal repayment starts, and the total interest compared with a regular amortizing loan.

## Inputs

- Loan amount
- Annual interest rate (%)
- Interest-only period (years, months)
- Total term (years, months)

## Results

- Interest-only monthly payment
- Monthly payment after the IO period
- Payment increase
- Total interest
- Total interest on a regular loan
- Extra interest from the IO period

## Formula

```
Interest-only payment = loan × rate ÷ 12
Later payment = pmt(rate ÷ 12, months remaining after the IO period, loan)
Total interest = IO payments + amortizing payments − loan
```

## Explanation

Interest-only loans keep payments low at first, which can suit investors or people expecting a big income rise, but the balance doesn't fall and payments jump when the IO period ends.

### How to use the Interest-Only Mortgage Calculator

- **Loan amount**
- **Annual interest rate**
- **Interest-only period**
- **Total term**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the loan amount, interest rate, interest-only period and total term.

### Tips

- Get a written loan estimate and compare the APR, not just the interest rate.
- Include property tax, insurance, HOA fees and maintenance in your monthly budget.
- A larger down payment lowers the payment and can remove mortgage insurance.
- Rates change daily – use a current quote for the most accurate result.

### Common mistakes to avoid

- Looking only at the monthly payment instead of the total cost of the loan.
- Forgetting closing costs and fees.
- Assuming home prices always rise.

### Inputs explained

FieldWhat to enterLoan amountAmount in your currencyAnnual interest rateIn %Interest-only periodUnits: years, monthsTotal termUnits: years, months

### What each result means

- **Interest-only monthly payment** = [Loan amount]×[Annual interest rate]÷1200
- **Monthly payment after the IO period** = pmt([Annual interest rate]÷1200, [Total term] - [Interest-only period], [Loan amount])
- **Payment increase** = ([Monthly payment after the IO period]÷[Interest-only monthly payment] - 1)×100
- **Total interest** = [Interest-only monthly payment]×[Interest-only period] + [Monthly payment after the IO period]×([Total term] - [Interest-only period]) - [Loan amount]
- **Total interest on a regular loan** = pmt([Annual interest rate]÷1200, [Total term], [Loan amount])×[Total term] - [Loan amount]
- **Extra interest from the IO period** = [Total interest] - [Total interest on a regular loan]

### Example values

How the main result changes when **Loan amount** changes and everything else stays at the example values above:

Loan amountInterest-only monthly payment175,000947.92262,5001,421.88350,0001,895.83437,5002,369.79525,0002,843.75700,0003,791.67

## Worked example

Inputs — Loan amount: $350,000; Annual interest rate: 6.5 %; Interest-only period: 10 years; Total term: 30 years.

Results — **Interest-only monthly payment = $1,895.83**; Monthly payment after the IO period = $2,609.51; Payment increase = 37.64 %; Total interest = $503,781.43; Total interest on a regular loan = $446,405.71; Extra interest from the IO period = $57,375.72.

## FAQ

**What is an interest-only mortgage?**
A loan where you pay only interest for an initial period.

**What happens when the IO period ends?**
Payments rise to repay the principal over the remaining term.

**Who uses interest-only loans?**
Mainly investors and high earners with variable income.

**What formula does the Interest-Only Mortgage Calculator use?**
Interest-only payment = loan × rate ÷ 12.


## Sources

- [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/)