Calculators · Buying & Financing
Interest-Only Mortgage Calculator
Estimate an interest-only mortgage: the lower payment during the interest-only years and the higher principal-and-interest payment after it ends.
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How this calculator works
With an interest-only loan you pay only interest for a set number of months, so the balance does not go down. When that period ends, the payment rises to repay the full balance over the remaining months, or the remaining balance comes due.
This calculator shows both payments side by side, so the increase is not a surprise.
- During the interest-only months, the payment is the balance times the monthly rate.
- Afterward, the loan amortizes over the months left (or over the full loan length, if you choose that option).
- Set a loan term shorter than the amortization to model an interest-only loan with a balloon.
Worked example
Example values are illustrative, not quotes or market data. These are the numbers the calculator above starts with.
Inputs
- Loan type
- Conventional
- Home price
- $600,000
- Down payment
- $120,000 (20%)
- Interest rate
- 6.5%
- Loan length
- 30 years
- Property taxes per year
- $12,000
- Homeowners insurance per year
- $3,600
- HOA dues per month
- $0
Results
- Loan type
- Conventional
- Home price
- $600,000
- Down payment
- $120,000 (20.0%)
- Rate / length
- 6.5% / 30 yrs
- Total monthly housing cost
- $3,900
- Principal and interest
- $2,600
- Mortgage insurance (month 1)
- $0
- Loan amount
- $480,000
- Cash to close (down payment only until costs are entered)
- $120,000
- Total interest
- $690,900
- Balance after 5 years
- $480,000
Common questions
Do interest-only payments build equity?
No. Only price changes and any extra principal you choose to pay change your equity during the interest-only period.
How big is the payment jump?
It depends on the rate and how many years remain. The results show the payment after the interest-only period ends.
Who offers interest-only loans?
They are less common for primary homes than standard loans. Some jumbo, portfolio and investor (DSCR) loans offer them.
Related calculators
- Mortgage Payment Calculator
- Balloon and Seller-Financing Calculator
- DSCR Loan Calculator
- Adjustable-Rate Mortgage (ARM) Calculator
- All calculators
Estimate only. Actual loan terms, eligibility, insurance, taxes, and settlement charges require verification. These are planning estimates, not a lender Loan Estimate, Closing Disclosure, appraisal, or approval. Michael O'Neal is a real estate broker, not a lender, appraiser, attorney or tax adviser.
Next step
Want a real financing quote? Connect with Home Front Mortgage.
Andrew Fairleigh, Mortgage Loan Originator, Home Front Mortgage, NMLS #1878546. (979) 595-8979 · [email protected]
Rates in these calculators are examples, not Home Front quotes. Your application goes to Home Front's secure site. Do not send financial documents through this website.
Affiliated business arrangement disclosure. This is to give you notice that some agents and owners at Keller Williams Realty Northeast, including Michael O'Neal, have a business relationship with certain providers of services related to your purchase, sale or refinance of real estate, including Home Front Mortgage and Keystone Title & Escrow. Because of this relationship, a referral may provide some owners and agents at Keller Williams Realty Northeast a financial or other benefit. You are NOT required to use either company as a condition for your purchase, your financing or refinance, or any other transaction related to a property. There are frequently other providers available with similar services. You are free to shop around to determine that you are receiving the best services and the best rate for these services. You will be given the written Affiliated Business Arrangement Disclosure, including estimated charges, to review and sign.