Interest-Only Loan Payment Calculator

You borrow $350,000 and pay $1,750/month for five years. Then your statement arrives: $2,900/month. Same loan, same rate—but the interest-only period ended. That's the reality of interest-only loans, and this calculator shows you both numbers upfront so you're not caught off guard.

During the interest-only (IO) period, you pay only the interest accruing on your balance. Your principal doesn't shrink—you owe the same amount you borrowed on day one. When IO ends, the loan converts to full amortization: you now pay principal AND interest, squeezed into a shorter remaining term. The payment jump can be 40-70%.

Enter your loan amount, rate, total term, and IO period. The calculator displays both payment phases, the exact percentage increase, and total interest over the loan's life. Use it to decide if an IO structure fits your financial plan—or if it's a trap waiting to spring.

Loan amount: IO payments scale directly. $200,000 at 6% costs $1,000/month interest-only. $400,000 at 6% costs $2,000/month. Double the balance, double the payment.

Interest rate: Every 1% rate change moves your IO payment by $83 per $100,000 borrowed monthly. An IO ARM (adjustable-rate mortgage) adds uncertainty—your IO payment can rise mid-period if rates increase.

IO period length vs. total term: A 30-year loan with a 10-year IO period leaves only 20 years for amortization. The same loan with a 5-year IO period has 25 years to amortize. Longer IO = lower payment now, higher payment later, more total interest paid.

Using IO to afford more house: If you can only afford the IO payment, you can't afford the house. When payments increase, you'll either struggle or be forced to sell. IO should be a strategy, not a stretch.

No equity building: During IO, your principal balance doesn't decrease. If home values drop, you could owe more than the house is worth with no equity cushion.

Refinancing isn't guaranteed: Many IO borrowers plan to refinance before the payment jump. But rates might be higher, your credit might change, or lending standards might tighten. Don't count on refinancing as your only exit.

Combining IO with variable rates: An IO ARM doubles your risk. If rates rise AND your IO period ends simultaneously, your payment could jump 60%+ overnight.

Balloon payment structures: Some IO loans require the full balance due at the end instead of converting to amortization. Miss this detail and you face a six-figure payment with no warning.

IO phase: Monthly payment = (Principal × Annual Rate) ÷ 12. The balance remains constant since no principal is paid.

Post-IO phase: The full original principal is amortized over the remaining term using standard loan formulas. A 30-year loan with 7-year IO becomes a 23-year amortization.

Total interest: IO phase interest + post-IO phase interest. IO loans typically cost more total interest than equivalent amortizing loans because you pay interest on the full balance longer.

Assumptions: Fixed interest rate (if you have an ARM, actual results will vary), no prepayments during IO, and full amortization after IO ends (not balloon).