Interest-Only Mortgage Calculator

See exactly how an interest-only mortgage works: low payments while interest-only, then a payment jump when full amortization begins. Compare total interest cost against a fully amortizing loan.

Loan amount

Rate

Interest-only years

Total term (years)

Interest-only payment

$2,812

first 10 years

Amortizing payment after IO

$3,625

over remaining 20 years

Payment jump at year 10

+$813

budget shock to plan for

Extra interest vs full amort

+$74,813

cost of the IO period

Reading the number

Interest-only loans keep payments low while you don't pay down principal. The trade-off is a payment jump at the end of the IO period (your full 20-year amortization compresses into less time) and meaningful extra total interest.

Standard fully-amortizing payment over 30 years would be $3,146/mo with total interest of $682,728. Use IO loans when rental income, bonus structure, or a planned sale lines up with the IO period — not as a tool to qualify for more house.

How to Use

Enter the loan amount, rate, and total term (typically 30 years).
Enter the interest-only period (commonly 5, 7, or 10 years).
Compare the interest-only payment to the amortizing payment that kicks in afterward.
Note the payment jump at reset — this is the key risk to plan around.
Compare total interest paid vs a fully amortizing 30-year loan to size the cost of the IO option.

Frequently Asked Questions

When does interest-only make sense?

When your income or asset value is timed: variable-comp earners with bonus cycles, real estate investors holding for resale, or borrowers expecting a windfall before the IO period ends. It's a poor choice if your only plan is to keep payments low.

How big is the payment jump at reset?

Significant. After a 10-year IO on a 30-year loan, the remaining 20 years must repay 100% of principal — the amortizing payment is materially higher than what a 30-year fully-amortizing loan would have charged from day one.

Can I make principal payments during the IO period?

Most IO loans allow optional principal payments. Doing so reduces both the interest carry and the amortizing payment that kicks in later. Read your note for prepayment restrictions.

What happens if I refinance before the IO period ends?

You pay off the IO loan with the new mortgage and reset the amortization clock. Watch for prepayment penalties — some IO loans have them in the first few years.