Cernarus

Mortgage Interest-Only Calculator

This calculator models common interest-only mortgage scenarios: continuous interest-only payments, an initial interest-only period followed by full amortization, and interest-only with a balloon at maturity. Use it to compare periodic payment amounts and understand payment changes when amortization begins or a balloon becomes due.

Enter the loan amount, annual interest rate (APR), total term, interest-only period length, and number of payments per year. The tool assumes interest is calculated on the outstanding principal and periods are equal. It does not estimate taxes, insurance, fees, or escrow.

Updated Nov 13, 2025

Compute interest-only payments during the initial IO period, then calculate the amortizing payment for the remaining term.

Inputs

Results

Updates as you type

Interest-only payment (IO period)

$1,125.00

Payment after IO (amortizing)

$1,667.50

OutputValueUnit
Interest-only payment (IO period)$1,125.00—
Payment after IO (amortizing)$1,667.50—
Primary result$1,125.00

Visualization

Methodology

Rates and numeric calculations follow standard financial mathematics. Periodic rate = APR / 100 / payments per year. Interest-only payment = principal × periodic rate.

For amortizing payments we use the standard annuity formula: payment = principal × r / (1 - (1 + r)^-N) where r is the periodic rate and N is the remaining number of payments.

Validation and reliability guidance reference established standards for software quality and risk management. See NIST guidance for secure and reliable systems, ISO quality management principles, IEEE best practices for software engineering, and OSHA guidance for operational risk where workplace processes are relevant. This calculator includes conservative validation but is not a substitute for lender disclosures or official truth-in-lending calculations.

Worked examples

Example 1: $300,000 loan, 4.5% APR, 30-year term, 5-year IO, monthly payments. IO payment = $300,000 × (0.045/12). After 5 years the payment switches to the amortizing payment computed over 25 years of monthly payments.

Example 2: $200,000 loan, 3.8% APR, 15-year term, IO for entire term (pure IO). Payment remains interest-only each period; full principal remains due at maturity if the loan requires principal repayment at the end.

Further resources

External guidance

Expert Q&A

Is the interest-only payment the same as the amortizing payment?

No. Interest-only payments cover only interest and leave principal unchanged. Amortizing payments include principal and interest and reduce the principal balance over time.

What happens when the interest-only period ends?

When the interest-only period ends, the payment typically increases because the remaining principal must be amortized over fewer remaining payments. Use the 'Interest-only then amortize' method to see the post-IO payment amount.

Does this calculator include taxes, insurance, or fees?

No. This tool calculates interest and amortization only. Taxes, insurance, escrow, private mortgage insurance, late fees, and lender charges are not included and must be added separately when estimating total payment obligations.

How accurate are the results and what are the assumptions?

Results follow standard financial formulas but assume fixed rates, consistent payment intervals, and no prepayments or fees. Rounding differences and lender-specific conventions (daily interest accrual, grace periods, compounding differences) can produce different results. Always compare with official loan documents and lender disclosures.

Are there safety or compliance standards applied to this tool?

Design and validation reference NIST, ISO, and IEEE quality and software guidance for robustness; operational risk considerations reference OSHA where relevant. This is a calculation aid and not a regulatory disclosure; consult licensed professionals and official lender statements for compliance.

Sources & citations