Investor Tools
Interest-Only vs. Principal & Interest Calculator
Enter the loan amount and rate to compare payment structures.
Illustrative example
$500,000 at 6.50% over 30 years
Over a five-year comparison, the calculated interest-only payment is $2,708 per month and the calculated P&I payment is $3,160. The P&I balance after five years is $468,055.
Structure matters beyond payment
Interest-only may preserve near-term cash flow but does not reduce principal during the IO period. Amortizing payments reduce principal but require higher monthly debt service. Actual rates, IO periods, adjustments, balloons, maturities, and underwriting vary by loan and program.
Frequently asked questions
How is an interest-only payment calculated?+
Multiply the loan amount by the annual interest rate and divide by 12. During the interest-only period, the scheduled monthly principal amount is zero.
How is the principal-and-interest payment calculated?+
The calculator uses the standard fixed-rate amortization formula based on principal, monthly interest rate, and the total number of monthly payments.
Does a lower interest-only payment mean it is the better structure?+
No. Interest-only payments may preserve near-term cash flow, while amortizing payments reduce principal. The appropriate structure depends on the loan terms, hold period, property cash flow, and investment plan.
Does this calculator represent actual loan terms?+
No. It compares payment structures at one nominal rate for educational analysis. Actual IO periods, rates, adjustments, balloons, maturities, and underwriting vary.
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