Interest-Only Mortgage Calculator
Compare an interest-only mortgage with a standard loan and see the payment jump when the interest-only period ends.
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About the Interest-Only Mortgage Calculator
An interest-only mortgage lets you pay only the interest for an initial period, often 5 to 10 years, so the payment is lower. After that the loan amortizes over the remaining years, so the payment rises sharply, a change called payment shock. This calculator shows both payments and compares the total interest with a standard mortgage.
How to use it
- Enter the loan amount, interest rate and total term.
- Enter how many years the loan is interest-only.
- Press Calculate interest-only loan to see both payments and the total cost.
Pros and cons
| Pros | Cons |
|---|---|
| Lower initial payment | No principal is paid during the interest-only period |
| More cash flow early | Payment jumps when the period ends |
| Can suit rising income or investors | Higher total interest and more risk if home values fall |
Who uses interest-only loans?
Investors, buyers who expect income to rise and borrowers with irregular income sometimes use them. Most are not qualified mortgages, so lenders may require larger down payments and higher credit scores.
Frequently asked questions
How does an interest-only mortgage work?
You pay only interest for a set period, then payments increase because principal is repaid over the remaining term.
Is an interest-only mortgage a good idea?
It can help cash flow, but it carries payment shock and builds no equity during the interest-only period. It is riskier than a standard mortgage.
How much is the payment increase?
It depends on the rate and term. A $400,000 loan at 6.75% jumps from about $2,250 to about $3,040 after ten years in this example.
Can I pay principal during the interest-only period?
Usually yes. Extra principal payments reduce your balance and the later payment.
Are interest-only loans common?
They are far less common than traditional mortgages and are usually offered by select lenders.
Last reviewed: November 2026. Estimates only, not financial, tax or legal advice.