Interest-Only Payment Calculator
Compute an interest-only monthly payment at a rate you enter.
Your scenario
This is not a quote; test any rate.
Results
Fill in the fields to see your result; it updates as you type.
This calculator is for educational purposes only and does not constitute a loan approval, pre-qualification, commitment to lend, or quote of rates or terms. Actual qualification is determined by full underwriting, including an appraisal with a market rent analysis (Form 1007) or executed lease where applicable. Program guidelines vary by scenario. Loancutters Inc. dba Evoque Lending, NMLS #337415, CA DRE #01521538. Equal Housing Opportunity.
How to read the result
An interest-only payment is the simplest calculation in lending: the loan balance times the annual rate, divided by twelve. Every dollar of it is interest; the balance doesn't shrink no matter how many payments you make during the IO period. That's the trade: a lower payment now in exchange for no principal progress.
Investors often use IO structures to maximize cash flow during a hold, a renovation, or a lease-up. The payment you see here is also handy as a comparison point; run the same loan through the principal-and-interest calculator to see exactly what the amortizing difference costs per month.
What lenders actually use
Interest-only periods don't last for the life of the loan. When the IO window ends, the payment converts to an amortizing one calculated over the remaining term; which means it steps up, sometimes substantially, because the same balance now has fewer years to pay down. Some programs also qualify IO loans using a payment other than the IO figure, precisely to make sure the deal still works after conversion.
Remember that this tool shows principal-and-interest mechanics only: taxes, insurance, and any dues sit on top of whatever payment structure you choose. Guidelines vary by program; contact us to see whether an IO structure fits your scenario.
Common questions
Why would an investor choose interest-only?
Cash flow. A lower payment during the IO period widens the monthly margin, which can matter during renovations, lease-up, or a planned short hold before a sale or refinance.
What happens when the interest-only period ends?
The loan converts to amortizing payments over the remaining term, so the payment increases. Planning for that step-up; or for the refinance or sale that precedes it; is the core discipline of using IO well.
Does an interest-only payment build any equity?
Not through the payment itself; the balance stays level. Equity during an IO period comes only from appreciation or improvements you make to the property.
Is the payment shown here what I'd be quoted?
No. You entered the rate yourself to test the math; actual pricing depends on the full scenario and is determined through underwriting, not a calculator.