Free interest-only mortgage calculator
See your interest-only payment and the payment shock when the IO period ends — enter loan amount, rate, IO period, and full amortization term, updated live, as you type.
On this page10 sections
I/O mortgages carry payment-shock risk after the I/O period ends. No equity is built during the interest-only phase. Consult a licensed lender.
Results are estimates. Consult a professional.
How the interest-only mortgage calculator works
An interest-only (IO) mortgage has two phases. During the IO period (typically 5 or 10 years) your payment covers only the monthly interest — the balance never decreases. When the IO period ends, the remaining balance is re-amortized over the remaining term and your payment jumps substantially. This calculator computes both phases and shows the total interest cost compared to a standard amortizing mortgage.
Because zero principal is repaid during the IO period, you owe the same amount after 10 years as you did on day one. If home values fall, you can end up underwater with a sharply higher payment — this is the core risk of interest-only financing.
CFPB — What is an interest-only mortgage loan?Worked example: $400k at 7%, 10-year IO period
You take a $400,000 interest-only mortgage at 7%. The IO period runs 10 years; after that the remaining balance (still $400,000) amortizes over the remaining 20 years of the 30-year term.
IO vs standard payment comparison at 7%
The table compares the interest-only payment, the standard 30-year payment, and the post-IO payment for common loan amounts at 7%. The post-IO payment is what you owe once the IO period ends and the balance begins to amortize.
| Loan Amount | IO payment (7%) | Standard 30-yr | Post-IO (5-yr IO) | Post-IO (10-yr IO) |
|---|---|---|---|---|
| $300,000 | $1,750/mo | $1,996/mo | $2,118/mo | $2,324/mo |
| $400,000 | $2,333/mo | $2,661/mo | $2,824/mo | $3,100/mo |
| $500,000 | $2,917/mo | $3,327/mo | $3,530/mo | $3,873/mo |
Source: CFPB interest-only mortgage guide. Post-IO payments assume balance unchanged from origination. Rate held constant at 7% for illustration.
Tips for using an interest-only mortgage
Interest-only mortgages can make sense in narrow situations — but they require discipline and a clear exit plan. Here is how to use one without getting blindsided.
- Have a concrete plan for the post-IO jump. Before you close, model the post-IO payment in your budget and make sure you can absorb it — even if your income stays flat and rates rise.
- Make voluntary principal payments during the IO period. The IO term is a minimum payment — nothing stops you from paying extra principal. Each dollar reduces the balance that must be amortized later, shrinking the payment shock.
- Understand the scenario where you cannot refinance. If home values fall or your credit deteriorates, you may be stuck with the higher post-IO payment. IO mortgages work best when equity is strong and your income is rising.
- Compare total interest cost, not just the low initial payment. The IO loan will almost always cost more in total interest than a standard amortizing loan at the same rate. Use the calculator to see the exact difference before deciding.
- Watch out for IO ARMs. Many IO mortgages are also adjustable-rate. At the end of the IO period you face both the re-amortization shock and a potential rate reset — a double risk. Separate these two variables when comparing loans.
Accuracy and limitations
This calculator assumes a constant interest rate and that no principal is paid during the IO period. If your loan is also an ARM, the post-IO payment will differ from what the calculator shows because the rate may change at the same time the IO period ends. The total interest figures assume you keep the loan for the full 30 years without refinancing or selling — most borrowers do not.
Not financial or tax advice — consult a qualified professional for your situation.
Interest-only mortgage terms defined
About this interest-only mortgage calculator
This calculator runs entirely in your browser — nothing you enter is sent to any server.
Browse more in our finance calculators, or explore the complete library on the free calculators page.