This calculator will compute an interestonly loans accumulated interest at various durations throughout the year. These amounts reflect the amount which would need to be paid in order to maintain a constant principal balance.
For your convenience we list current Los Angeles mortgage rates to help you perform your calculations and find a local lender. Calculator Rates
Have you ever wondered how interestonly mortgage loans and their calculators work? As a homebuyer exploring financing options, things can get confusing pretty quickly. I want to provide a comprehensive guide to interestonly mortgages and their calculators, so you can make an informed decision when purchasing your dream home.
What Exactly Are InterestOnly Mortgage Loans?
Interestonly mortgage loans allow borrowers to pay only the interest on the loan for a set period of time, typically 510 years. During this introductory period, your monthly payments go entirely towards interest and nothing towards paying down the loan principal.
Once the interestonly period ends, your payments increase to start paying back principal as well. This transition to a fully amortized payment can mean a huge jump in your monthly dues.
Interestonly loans appeal to certain borrowers for a few key reasons:
 Lower monthly payments free up cash flow for other goals
 Interest payments are tax deductible for your primary residence
 Makes sense if you expect earnings to rise substantially
However, they also come with considerable risks that I’ll outline later.
How Do InterestOnly Mortgage Calculators Work?
Online interestonly mortgage calculators allow you to estimate your monthly payments during the interestonly period. They use a simple formula:
(Interest Rate % x Mortgage Amount) / 12 = Monthly Payment
For example, let’s say you get a $400,000 mortgage at a 7% interest rate. Plugging this into the calculator gives:
(0.07 x $400,000) / 12 = $2,333 monthly payment
So during the introductory interestonly term, your monthly dues would equal $2,333. Pretty straightforward!
These calculators only estimate your payment during the interestonly period itself. Once the loan starts amortizing, your payment will be recalculated based on the remaining principal, remaining term, and interest rate.
Should You Consider an InterestOnly Mortgage?
Interestonly loans can be attractive, especially if cash flow is tight. But they do carry considerable risk that borrowers should weigh carefully before moving forward. Here are some key pros and cons:
Pros
 Lower initial monthly payments free up cash for other goals
 Interest payments are tax deductible up to $750k principal
 Allows flexibility if you expect earnings to rise substantially
Cons
 Tough qualification criteria – high credit score and reserves required
 Payment will jump substantially once interestonly period ends
 Slower equity buildup compared to fully amortized loan
Interestonly loans really only make sense if you have a solid plan to handle the payment spike down the road. Perhaps you’re nearing retirement and expect earnings to fall, so lower initial payments provide flexibility. Or you anticipate selling the home or refinancing before the term ends.
Without a plan, however, interestonly loans can be risky. You can get stuck without enough income to handle the higher payments. And limited equity growth leaves less protection if you need to sell.
Really weigh the pros and cons and have an exit strategy before pursuing an interestonly mortgage. And leverage online calculators to estimate your initial monthly payments. This can help assess if the temporary payment reduction is worth the longerterm risks.
Other Key Questions to Ask About InterestOnly Loans
If you decide to move forward with an interestonly mortgage, here are some other key questions to ask:

How long is the interestonly period? Typically 510 years.

What is the interest rate? Is it fixed or adjustable? Be sure to run different rate scenarios.

How much will my payment jump after the interestonly term? Request an amortization schedule from the lender.

How much equity will I have built up at the end of the term? Request a principal balance projection.

Are there any prepayment penalties if I sell or refinance? Some lenders charge exit fees.

What are the qualification criteria? Interestonly loans often require pristine credit and substantial reserves.

Are there any alternative programs that might work better for my situation? Explore all your options.
Be an Informed Borrower
Online interestonly calculators make it easy to estimate your temporary payment savings. But it’s critical to also model out the future implications down the road. And have a solid payoff plan rather than just kicking the can a few years.
Buying a home is a huge financial commitment. So arm yourself with education, use all resources available, and make sure your loan program aligns with your short and longterm goals. There are no onesizefits all solutions. The ideal loan depends entirely on your unique situation and objectives.
I wish you the very best on your home buying journey! Reach out anytime if you need an independent second opinion. I’m always happy to help buyers understand all their financing options.
Current Local Mortgage Rates
The following table shows current Los Angeles 30year mortgage rates. You can use the menus to select other loan durations, alter the loan amount, change your down payment, or change your location. More features are available in the advanced drop down
See the Real Cost of Debt
The above calculator also has a second tab which shows the current interest rates on savings accounts. This further shows how expensive debt is because most forms of consumer debt charge a far higher rate of interest than banks pay savers AND savers get taxed on interest income they earn at their ordinary tax rates. The table below shows the full cost of $10,000 of debt at various rates of interest. While different consumer debt types typically have different amounts, we kept the amount column constant to show the absolute difference in cost per Dollar earned or borrowed. We also presumed interestonly payments on the debt & a 25% tax rate on income.
Account Type  Amount  Rate  Annual Interest  After Tax Income  Required Income to Cover Interest Expense 

Big Bank Savings  $10,000  0.02%  $2  $1.50  – 
Highyield Savings  $10,000  4.00%  $400  $300.00  – 
Certificate of Deposit  $10,000  5.00%  $500  $375.00  – 
New Car, Good Credit  $10,000  6.49%  $649  –  $865.33 
Used Car, Bad Credit  $10,000  10.90%  $1,090  –  $1,453.33 
Credit Card  $10,000  21.52%  $2,152  –  $2,869.33 
Personal Loan, Good Credit  $10,000  14.5%  $1,450  –  $1,933.33 
Personal Loan, Bad Credit  $10,000  30.0%  $3,000  –  $4,000 
Payday Loan  $10,000  400%  $40,000  –  $53,333.33 
How to Calculate an Interest Only Mortgage
FAQ
How to calculate interest only payment on mortgage?
How much can I borrow for an interestonly mortgage?
How much is an interestonly mortgage on $100,000?
100K Interest Only Mortgage




2%

5%

10 years

£166

£416

15 years

£166

£416

20 years

£166

£416

What are current interestonly mortgage rates?
30 year fixed

7.16%

15 year fixed

6.64%

10 year fixed

6.58%

5/1 ARM

6.65%

What is an interestonly mortgage calculator?
This interestonly mortgage calculator is a tool that will help you find the monthly payment if you were to take out this specific type of mortgage loan. The result shows you the amount of interest you have to pay.
How does the interest only loan calculator work?
The interest only loan calculator calculates initial interest only payments as well as monthly payments after the interest only period is over. The interest only loan calculator excel with amortization will calculate the monthly payment based on mortgage amount, loan terms, interest rate, and the starting payment date.
What is an interestonly mortgage?
An interestonly mortgage is a loan with monthly payments only on the interest of the amount borrowed for an initial term (typically seven to 10 years) at a fixed interest rate. The interestonly mortgage payment calculator shows what your monthly mortgage payment would be by factoring in your interestonly loan term, interest rate and loan amount.
How do I calculate my interest only loan payment?
This Interest Only Loan Calculator figures your payment easily using just two simple variables: the loan principal owed and the annual interest rate. Click “Calculate Interest Only Payment” and your monthly interest payment will display. Interestonly loans are simple.