By Brandon Sooknanan, Founder of StatementReady
Use the page's worked example to review the interest-only payment and the change to principal and interest in a loan file. The interest-only mortgage calculator shows both periods.
Inputs, formulas and outputs
Inputs: loan amount, annual rate (no default), interest-only period in years and amortizing term (years left to repay once interest-only ends; no default).
- Monthly interest-only = loan amount × annual rate ÷ 12
- Period interest = that payment × interest-only months
- Later P&I = standard amortization of the full loan over the entered amortizing term at the same rate (0% divides evenly)
- Payment change = later P&I minus interest-only payment
Rounded to the cent.
Worked example (page numbers only)
- $400,000 at an entered 7% → $2,333.33/month interest-only
- Over an entered 10-year interest-only period → $280,000.00 interest
- Then an entered 20 years of amortization → $3,101.20/month P&I, a +$767.87 change
Round numbers for illustration only; the rate and terms are inputs, not defaults. The interest-only period is also an entered input, not a rule or limit.
The transition
The full balance is amortized over the years left to repay at the same entered rate. Do not present the example as a lender offer or payment forecast.
What it doesn't do
- Estimate only; holds the entered rate fixed for both periods
- Excludes taxes, insurance, mortgage insurance and fees
- Does not model rate adjustments, prepayment or a balloon payment
- Sets no rate or terms and makes no lending decision
- The balance stays unchanged during interest-only unless extra principal is paid
- Runs in the browser; what you type isn't sent or stored
Related free tools: HELOC payment calculator (draw period on the balance drawn), cash-out refinance calculator, mortgage DTI calculator, all free tools.
When you're ready to work from the real statements, StatementReady checks whether each statement's transactions add up to its printed balances. It assists review of loan files; the lender makes all underwriting decisions.
Not legal or tax advice. StatementReady isn't affiliated with or endorsed by Fannie Mae or any lender named here.
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