Interest Only Mortgage Calculator - Interest Only Loan Payment Calculator
Free interest only mortgage calculator for interest only loans. Calculate interest only mortgage payments, principal payments, and loan analysis. Our calculator uses interest only mortgage formulas to determine monthly payments, total interest, and interest only loan structures.
Last updated: October 19, 2025
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Interest Only Period
During this period, you'll pay only interest. Principal payments are optional but recommended to reduce the loan balance.
Payment Breakdown
Interest Only Payment
$2,708
Monthly interest payment
Principal Payment
$2,000
Optional monthly principal
Total Payment
$4,708
Interest + Principal
Interest Only Period
During the 5-year interest-only period, you'll pay $2,708monthly in interest. Principal payments of $2,000 are optional but recommended.
Loan Balance
After the interest-only period, your remaining balance will be $380,000if you make principal payments, or $500,000 if you don't.
Interest Costs
You'll pay $162,500 in interest during the interest-only period. Making principal payments reduces this cost and your final balance.
Rate Analysis
This interest-only mortgage has a Good Rate rate of 6.50%.This is a competitive interest-only mortgage rate, offering reasonable financing costs.
Interest Only Mortgage Calculator Types & Features
Payment calculation
Interest Only Payments
Calculate monthly interest only mortgage payments and interest costs
Loan analysis
Loan Structure
Calculate interest only loan payments and loan structures
Rate analysis
Interest Comparison
Compare interest only mortgage rates and financing options
Interest calculation
Total Interest Costs
Calculate total interest only loan interest and financing costs
Mortgage comparison
Option Analysis
Compare different interest only mortgage options and terms
Payment analysis
Payment Structure
Calculate interest only loan payments and payment structures
Quick Example Result
For a $500,000 loan at 6.5% interest with 5-year interest-only period and $2,000 monthly principal:
Interest Only Payment
$2,708
Total Payment
$4,708
How Our Interest Only Mortgage Calculator Works
Our interest only mortgage calculator uses standard loan payment formulas to calculate interest only mortgage payments and loan analysis. The calculation applies interest only mortgage principles to determine monthly payments, total interest, and interest only loan structures.
The Interest Only Mortgage Payment Formula
Interest Only Payment = Loan Amount × (Interest Rate ÷ 12)Where Loan Amount = Principal, Interest Rate = Annual Rate, 12 = Months per Year
Shows interest only mortgage payment calculation and loan analysis
Interest Only Mortgage vs Traditional Mortgage
Interest only mortgages offer several advantages over traditional mortgages: lower initial payments, increased cash flow for investments, and the ability to qualify for larger loans. However, they have higher long-term costs and the risk of payment shock when the interest-only period ends.
- Interest only mortgages have lower initial payments than traditional mortgages
- No principal payments required during the interest-only period
- Higher total interest costs over the life of the loan
- Payment shock risk when the interest-only period ends
- Popular with real estate investors and high-income borrowers
- Requires careful financial planning for the post-interest-only period
Sources & References
- Interest Only Mortgage Guidelines - Federal Reserve BoardOfficial guidelines for interest only mortgage lending and consumer protection
- Interest Only Mortgage Financing - Consumer Financial Protection BureauConsumer information about interest only mortgage financing options
- CFPB Interest Only Mortgage Resources - Consumer ProtectionEducational resources for interest only mortgage financing
Need help with other mortgage calculations? Check out our HELOC calculator and home equity loan calculator.
Get Custom Calculator for Your PlatformInterest Only Mortgage Calculator Examples
Loan Parameters:
- Loan Amount: $500,000
- Interest Rate: 6.5%
- Interest Only Period: 5 years
- Principal Payment: $2,000/month
- Monthly Interest: $2,708
Calculation Steps:
- Monthly Rate = 6.5% ÷ 12 = 0.542%
- Interest Only Payment = $500,000 × 0.542% = $2,708
- Total Payment = $2,708 + $2,000 = $4,708
- Remaining Balance = $500,000 - ($2,000 × 60) = $380,000
- Total Interest = $2,708 × 60 = $162,480
Result: Interest Only Payment = $2,708, Total Payment = $4,708
This interest only mortgage provides $500,000 in financing with a $2,708 monthly interest payment and $2,000 optional principal payment.
Higher Rate Example
$500,000 loan at 8.5% for 5 years
Interest Payment: $3,542, Total: $5,542
Lower Rate Example
$500,000 loan at 4.5% for 5 years
Interest Payment: $1,875, Total: $3,875
Frequently Asked Questions
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