An interest-only mortgage lets you pay just the interest for a set period (typically 5, 7, or 10 years) before your payment jumps to cover both principal and interest on the remaining balance. Our interest-only mortgage calculator shows your IO payment, your fully amortizing payment after the IO period ends, and the full amortization schedule so you can see exactly what you're signing up for.
Interest-Only Mortgage Calculator
Compare your interest-only payment to the fully amortizing payment that kicks in after the IO period ends, and explore the full amortization schedule.
Important interest-only mortgage terms to know
Interest-only (IO) period: The initial phase of the loan during which your monthly payment covers only interest, no principal is paid down. Common IO periods are 5, 7, or 10 years. Your loan balance stays flat during this time.
Fully amortizing payment: The higher monthly payment that kicks in after the IO period ends. Because you haven't paid down any principal during the IO phase, the full original balance must now be repaid over the remaining loan term. On a 30-year loan with a 10-year IO period, you repay the full balance over just 20 years.
Payment increase after IO period: The difference between your IO payment and your fully amortizing payment. This jump can be significant. On a $364,800 loan at 6.22% with a 10-year IO period, for example, the monthly payment increases by $769 — from $1,891 to $2,660 — the moment the IO period ends. Borrowers who aren't prepared for this increase can find themselves in financial difficulty.
Extra interest cost: The additional interest you pay over the life of the loan compared to a standard mortgage. Because no principal is reduced during the IO period, interest accrues on the full balance for a longer period. Using the pre-set figures in the calculator above, the IO structure adds nearly $16,000 in interest cost compared to a traditional mortgage over the same period.
Loan term: The total length of the mortgage, including both the IO period and the amortizing period. A 30-year loan with a 10-year IO period leaves 20 years to repay the full principal balance.
IO period vs. amortizing period: During the IO period, your payment is lower and entirely interest. During the amortizing period, each payment covers both principal and interest, with the principal share growing each year as the balance declines.
Who uses interest-only mortgages
IO loans can make sense in specific situations: buyers who expect their income to rise significantly before the IO period ends, investors who want to maximize cash flow in the short term, or borrowers purchasing in a market where they expect to sell before the amortizing period begins. They carry real risk, though, and are generally not the right fit for buyers who plan to stay in the home long term and need payment stability.
How to get help with a mortgage
If you're weighing an interest-only mortgage against a conventional loan, a mortgage professional can help you run the numbers and understand the long-term trade-offs for your specific situation.
Best Interest Financial can help. With decades of experience and over $1 billion in closed loans, their team knows how to match borrowers with the right loan structure for their goals. Talk with a Best Interest loan officer to explore your options.