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Interest Only Mortgage Calculator

Interest Only Mortgage Calculator

Calculator developed by
Michael Jensen
, Mortgage and Finance Guru
Edited by Harry Jensen

Use our Interest Only Mortgage Calculator to determine your initial monthly payment, projected payments and downside case for an interest only loan. Your interest rate and mortgage payment can increase significantly with an interest only mortgage and you can use our calculator to evaluate how your payment and interest expense can change over the course of your loan. We recommend that you use this calculator to run different cases to understand if an interest only mortgage is the right financing choice for you.

Watch our Interest Only Mortgage Calculator "How To" video

Inputs

Indicates the size of mortgage you would like to obtain
Please Enter Mortage Amount
The length, in years, of the mortgage. The most common mortgage term is 30 years
Please Select Mortgage Term (Years)
Initial time period for an interest only mortgage during which the interest rate is fixed and you only pay interest and no principal. The interest only period is typically 3, 5, 7 or 10 years
Please Select Interest Only Rate Period
The current interest rate for a 30 year fixed rate mortgage is approximately 5.750%
Please Select Interest Only Period Interest Rate
Determines how frequently your interest rate adjusts during the adjustable rate period of the mortgage. The adjustment period is typically every year (annual) or every six months (semi-annual)
Please Select Adjustment Period
The index is an underlying interest rate that is added to the margin to calculate your mortgage rate. Lenders typically use the 30 day average SOFR as the index for interest only loans after June 2020 and the 1 year LIBOR for loans prior to June 2020.
Please Select Interest Only Index
The current value of the index. The value of the index can change over the term of an interest only mortgage.
Please Enter Interest Only Index (%)
The second of two components used to calculate the fully-indexed rate. The margin is a set interest rate amount that does not change over the term of an interest only loan. The margin is typically 2.0% - 3.0%.
Please Select Interest Only Margin
A cap that limits the change in interest rate for the initial adjustment period following the interest only period
Please Select Initial Adjustment Cap
A cap that limits the change in the fully-indexed rate in any single adjustment period following the initial adjustment period
Please Select Adjustment Cap
A cap that limits the maximum increase in interest rate over the term of the mortgage
Please Select Life Cap

Outputs

Your monthly mortgage payment during the initial interest only period of the mortgage. Your payment during this period includes only interest and no principal

Current Fully-Indexed Rate Scenario

Current fully-indexed rate based on the current value of the interest only ARM index and margin. This is the value of the fully-indexed rate today, the value of the fully-indexed interest will likely change in the future
Initial mortgage payment during the adjustable rate period of the mortgage following the interest only period. Calculated based on the current fully-indexed rate
Total interest expense over the term of the mortgage based on using the current fully-indexed rate to calculate the monthly mortgage payment throughout the entire adjustable rate period of the mortgage
Worst Case Scenario
The maximum interest rate possible at the beginning of the adjustable rate period
Initial mortgage payment during the adjustable rate period of the mortgage; calculated based on the maximum interest rate possible at the beginning of the adjustable rate period
The maximum possible interest rate. Determined by the life cap of the mortgage
The first month when the maximum possible interest rate can be used to calculate the monthly mortgage payment. Determined by adjustment cap and life cap
Monthly mortgage payment based on the maximum possible interest rate over the life of the mortgage and the mortgage balance at that time
The worst case scenario -- total interest expense over the term of the mortgage calculated based on reaching the maximum interest rate as soon as possible
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Current Mortgage Rates in Columbus, Ohio as of May 20, 2024
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Rate data provided by RateUpdate.com. Displayed by ICB, a division of Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes, insurance premiums or private mortgage insurance if applicable. Actual payments will be greater with taxes and insurance included. Read through our lender table disclaimer for more information on rates and product details.
While we pride ourselves on the quality and breadth of the FREEandCLEAR mortgage calculators please note that they should be used for informational purposes only. Our calculators rely on assumptions by us and inputs and assumptions provided by you, which may be inaccurate. The outputs from our calculators are estimates only and should not be used as the sole basis for making any financial decisions. Always consult multiple financial professionals when determining the mortgage size and program that is appropriate for you.

About the calculator developer

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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