What will my interest-only loan cost?
See what you pay while a loan is interest-only, what the payment jumps to afterwards, and how much more interest it costs than a regular loan.
- Interest-only payment
- $1,750.00
A $300,000.00 loan at 7% costs $1,750.00 a month while it is interest-only, and $468,215.23 in interest over the whole term.
- Payment after the interest-only period
- $2,325.90
- Payment rise
- $575.90
- Interest in the interest-only period
- $210,000.00
- Total interest
- $468,215.23
- Total paid
- $768,215.23
- Regular loan payment
- $1,995.91
- Extra interest
- $49,688.54
- Last payment
- September 2056
- Months
- 360
Answer for the example date Wednesday, September 30, 2026. It changes to today's date when the page loads.
Interest-only payment: $1,750.00. A $300,000.00 loan at 7% costs $1,750.00 a month while it is interest-only, and $468,215.23 in interest over the whole term.
How does the balance fall, compared with a regular loan?
Where does each year of payments go?
What does every payment look like?
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Computes the interest-only payment, the payment after the interest-only period (or the balloon when the whole term is interest-only), and the extra interest compared with a regular loan.
Example with the default inputs (Loan amount $300,000.00, Interest rate 7%, Loan term (years) 30, Interest-only period (years) 10, Loan start date September 30, 2026) on the example date Wednesday, September 30, 2026: A $300,000.00 loan at 7% costs $1,750.00 a month while it is interest-only, and $468,215.23 in interest over the whole term.
Method: Interest-only payment = L × r; later payment = L × r ÷ (1 − (1 + r)^−(n − m)), with r = rate ÷ 1200, n the months in the term, and m the interest-only months; when m = n the loan L is due as a balloon.
- The rate is fixed for the whole term and interest is charged monthly at the yearly rate ÷ 12.
- Payments are made at the end of each month; the first is one month after the start date.
- The term and the interest-only period are rounded to whole months.
- After the interest-only months, the level payment repays the whole loan by the end of the term.
- Values are not rounded to the cent between months; only the display is rounded.
Worked examples
Each example is checked against the calculator on every build.
- Loan amount $300,000.00, Interest rate 7%, Loan term (years) 30, Interest-only period (years) 10 gives Interest-only payment $1,750.00, Payment after the interest-only period $2,325.90, Payment rise $575.90, Total interest $468,215.23, Regular loan payment $1,995.91, Extra interest $49,688.54.Source: Consumer Financial Protection Bureau, What is an interest-only loan? https://www.consumerfinance.gov/ask-cfpb/what-is-an-interest-only-loan-en-1917/
- Loan amount $500,000.00, Interest rate 9%, Loan term (years) 2, Interest-only period (years) 2, Loan start date 2026-10-01 gives Interest-only payment $3,750.00, Balloon at the end $500,000.00, Total interest $90,000.00, Total paid $590,000.00, Last payment 2028-10-01.Source: Consumer Financial Protection Bureau, What is an interest-only loan? https://www.consumerfinance.gov/ask-cfpb/what-is-an-interest-only-loan-en-1917/
- Loan amount $120,000.00, Interest rate 0%, Loan term (years) 10, Interest-only period (years) 2 gives Interest-only payment $0.00, Payment after the interest-only period $1,250.00, Total interest $0.00, Extra interest $0.00.Source: Consumer Financial Protection Bureau, What is an interest-only loan? https://www.consumerfinance.gov/ask-cfpb/what-is-an-interest-only-loan-en-1917/
How it works
Write L for the loan amount, r for the monthly rate (the yearly rate in percent ÷ 1200), n for the months in the term, and m for the interest-only months.
- Months: n = the term in years × 12 and m = the interest-only period in years × 12, each rounded to the nearest whole month (a half month rounds up). There is no answer when n or m rounds to 0, or when m is more than n.
- Interest-only payment: L × r each month for the first m months. The balance stays at L.
- Payment after the interest-only period: when m is less than n, the level payment that repays L over the n − m months left: payment = L × r ÷ (1 − (1 + r)^−(n − m)). At 0% it is L ÷ (n − m).
- Balloon: when m equals n, every payment is interest-only and the whole loan L is due with the last payment.
- Schedule: each month, interest = balance × r. In the level months the rest of the payment lowers the balance. The last payment pays whatever is left, so the principal adds up exactly to L.
- Totals: total interest is the sum of every month's interest (L × r × m + (n − m) × payment − L when m is less than n); interest in the interest-only period is L × r × m; total paid is L plus the total interest.
- Regular loan: the same L, rate, and n months with no interest-only months: payment = L × r ÷ (1 − (1 + r)^−n). The extra interest is the total interest minus that loan's total interest (n × payment − L).
- Payment rise: the payment after the interest-only period minus the interest-only payment.
- Last payment: with a start date, the first payment is one month after it and the last is n months after it.
Assumptions
- The rate is fixed for the whole term; interest is the balance × the yearly rate ÷ 12 each month.
- Payments are made at the end of each month.
- There are no fees, and no extra payments.
- Values are not rounded to the cent between months; only the display is rounded.
- The default rate is an example, not a live rate.
Worked examples by hand
$300,000 at 7% for 30 years, the first 10 interest-only. r = 0.07 ÷ 12 = 0.0058333, n = 360, and m = 120. The interest-only payment is 300,000 × 0.0058333 = $1,750. For the last 240 months, (1 + r)^−240 = 0.247602, so the payment is 300,000 × 0.0058333 ÷ (1 − 0.247602) = $2,325.90, a rise of $575.90. Total interest is 1,750 × 120 + 2,325.897 × 240 − 300,000 = $468,215.23. A regular 30-year loan pays 300,000 × 0.0058333 ÷ (1 − 1.0058333^−360) = $1,995.91 and $418,526.69 in interest, so the interest-only years cost $49,688.54 more.
A two-year bridge loan of $500,000 at 9%, all interest-only, starting October 1, 2026. The payment is 500,000 × 0.09 ÷ 12 = $3,750 for 24 months, and the $500,000 balloon is due with the last payment in October 2028. Interest is 3,750 × 24 = $90,000, so the total paid is $590,000.
$120,000 at 0% for 10 years, the first 2 interest-only. The interest-only payment is $0; the last 96 months pay 120,000 ÷ 96 = $1,250. There is no interest, so there is no extra interest.
Other questions people ask
How is an interest-only payment calculated?
Multiply the loan by the yearly rate and divide by 12. A $300,000 loan at 7% has an interest-only payment of 300,000 × 0.07 ÷ 12 = $1,750 a month. The balance does not go down while you pay only interest.
What happens when the interest-only period ends?
The whole loan must then be repaid over the years that are left, so the payment rises. On the $300,000 loan at 7% over 30 years with 10 interest-only years, the payment goes from $1,750 to $2,325.90 for the last 20 years.
Does an interest-only loan cost more?
Yes, at the same rate and term. You borrow the full amount for longer, so you pay more interest in total. In the example above the loan costs $468,215 in interest, $49,689 more than a regular 30-year loan at 7%.
What if the whole loan is interest-only?
Set the interest-only period equal to the term. You then pay only interest every month and repay the full amount in one balloon payment at the end. Bridge loans and some business loans work this way.
Why would anyone choose an interest-only loan?
The payment is lower at first, which can help when income is expected to rise, when the property will be sold before the payments rise, or for a short bridge loan. The risk is that the higher payment or the balloon comes due when you cannot pay or refinance it.
Is the example rate on this page today’s rate?
No. The page shows no live rates. The default rate is only an example; enter the rate your lender quotes.