Interest-Only Loan Calculator
Interest-only payment vs. full amortizing payment.
Enter your values
ⓘ Live results
Results
- Interest-only payment
- $2,166.67
- Payment after IO period
- $2,982.29
- Payment increase
- $815.63
- Principal paid during IO
- $0.00
Quick answer
During the interest-only period you pay only interest each month; once that period ends, the payment jumps because the remaining balance amortizes over a shorter time.
IO payment = P x r/12; post-IO payment amortizes full balance over remaining term
How to use the Interest-Only Loan Calculator
- 1Enter the loan amount, rate and interest-only period length.
- 2Compare the IO payment to the fully amortizing payment that follows.
- 3Plan for the payment jump — no principal is reduced during the IO period.
Worked example
Using the values the calculator loads with:
Inputs
- Loan amount400000 $
- Interest rate6.5 % APR
- Interest-only period10 years
- Total loan term30 years
Results
- Interest-only payment$2,166.67
- Payment after IO period$2,982.29
- Payment increase$815.63
- Principal paid during IO$0.00
Frequently asked questions
Do I build equity during the IO period?
Only through market appreciation, since none of the payment reduces principal.
Who uses interest-only loans?
Often investors seeking lower short-term cash outlay, or buyers expecting rising income or a sale before the IO period ends.
About this calculator
- Built and reviewed by James Whitfield · How we build and test calculators
- Report an error
Results are estimates for general information. For medical, legal, structural or financial decisions, confirm with a qualified professional.