Interest Only Loan Calculator

Use our free interest-only loan calculator to estimate payments during the interest-only period and the higher payments when amortization begins. Switch between IO Period and Full Term views.

Financial

Currency

Mode

Loan Amount

Annual Interest Rate (%)

Interest-Only Period (years)

years

Total Amortization Term (years)

years

Formula

An interest-only loan requires only interest payments for a specified period. After the IO period ends, the loan begins amortizing over the remaining term, resulting in higher monthly payments.

M_IO = P x r, M_Amort = P[r(1+r)^n] / [(1+r)^n - 1]

Percentage: The percentage value you want to apply

Number: The original number or value

Result: The calculated result

How It Works

1Enter the total loan amount and interest rate.
2Set the interest-only period in years.
3Set the total amortization term.
4IO mode shows only the interest-only payment and total.
5Full Amortization mode shows the blended average and the amortizing payment.

Examples

$300,000, 6%, 5yr IO, 30yr amortization

1.Interest-only payment = $300,000 x (6%/12) = $1,500/mo
2.After 5 years, payment amortizes over remaining 25 years = $1,932.90/mo
3.Total interest over 30 years is higher than a standard 30yr fixed

Result: $1,500.00

Frequently Asked Questions

A loan where you pay only the interest for a set period, keeping monthly payments low initially. After the IO period, payments increase to cover principal.

Payments increase because they now include principal amortization over the remaining term.

Borrowers who expect higher future income, investors who plan to sell before amortization begins, or those needing lower initial payments.

You build no equity during the IO period, and payment shock can occur when amortization begins.

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Interest Only Loan Guide

CalculateMe Team

Last updated: 2026-07-15

Frequently Asked Questions

A loan where you pay only the interest for a set period, keeping monthly payments low initially. After the IO period, payments increase to cover principal.

Payments increase because they now include principal amortization over the remaining term.

Borrowers who expect higher future income, investors who plan to sell before amortization begins, or those needing lower initial payments.

You build no equity during the IO period, and payment shock can occur when amortization begins.

Interest Only Loan Calculator

Formula

How It Works

Examples

$300,000, 6%, 5yr IO, 30yr amortization

Frequently Asked Questions

What is an interest-only loan?

What happens after the IO period?

Who benefits from interest-only loans?

What are the risks of interest-only loans?

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Interest Only Loan Calculator

Formula

How It Works

Examples

$300,000, 6%, 5yr IO, 30yr amortization

Frequently Asked Questions

What is an interest-only loan?

What happens after the IO period?

Who benefits from interest-only loans?

What are the risks of interest-only loans?

Related Calculators

Related Articles