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Interest Only Calculator

Interest only mortgages can provide you with very low monthly payments, however you are not paying off any principal during the interest only period. Use this calculator to examine an interest only mortgage.



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Definitions
Interest Only Adjustable Rate Mortgage (ARM)This calculator shows an Interest Only ARM. The length of the loan is 30 years, with the initial interest rate fixed for the interest only payment period. After the fixed interest rate period has passed, the interest rate and payment adjusts at the frequency specified and the loan is recast to fully amortize over the remaining term of the loan.

Interest Only ARM Mortgage Options
ARM TypeMonths Fixed
10/1 ARMInterest only payments at a fixed rate for 10 years. After 10 years, the loan is recast to fully amortize the outstanding balance over the remaining 20 year term of the loan.
7/1 ARMInterest only payments at a fixed rate for 7 years. After 7 years, the loan is recast to fully amortize the outstanding balance over the remaining 23 year term of the loan.
5/1 ARMInterest only payments at a fixed rate for 5 years. After 5 years, the loan is recast to fully amortize the outstanding balance over the remaining 25 year term of the loan.
3/1 ARMInterest only payments at a fixed rate for 3 years. After 3 years, the loan is recast to fully amortize the outstanding balance over the remaining 27 year term of the loan.
Mortgage amountThe original or expected balance for your mortgage.
Starting interest rateThe initial annual interest rate for this mortgage.
Starting monthly paymentThe monthly principal and interest payment (P&I) based on your beginning balance and starting interest rate.
Total paymentsThe total of all monthly payments over the full term of the mortgage. This total payment amount assumes that there are no prepayments of principal.
Total interestThe total of all interest paid over the full term of the mortgage. This total interest amount assumes that there are no prepayments of principal.
Months rate is fixedThis is the number of months that the interest rate is fixed. After this period, the interest rate will be subject to rate adjustments.
Months between adjustmentsThe number of payment periods between potential adjustments to your interest rate. The most common is 12 months, which means your payment could change, at most, once per year.
Expected adjustmentThe amount you believe that your mortgage interest rate will change. This amount will be added to or subtracted from your interest rate.
Interest rate capThis is the highest interest rate allowed by your mortgage. Your actual interest rate will not be adjusted above this rate.

This calculator is for illustrative purposes only. The information shown is designed to provide basic information about mortgage financing. Please consult with your tax advisor to determine the tax impact of home ownership and interest deductibility for your individual circumstances.


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