Interest Only ARM Calculator
Interest only mortgages can provide you with very low monthly payments, however you are not paying off any principal during the interest only period.
How the interest only arm calculator works
It computes the interest-only payment as the balance times the monthly rate, then the higher payment once amortization begins — when the full balance must be repaid over the shorter remaining term at the adjusted rate.
Worked example: with loan amount of $400,000, interest-only rate of 5.75% and interest-only period (years) of 10, the interest-only arm calculator shows interest-only payment of $1,916.67.
- Interest-only payment
- $1,916.67
- Payment after IO period
- $3,101.20
- Balance still owed
- $400,000
- Rate after reset
- 7.00%
The formula
Interest-only payment = balance × monthly rate. After the IO period, payment = balance × r ÷ (1 − (1 + r)⁻ⁿ) over the remaining months.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the interest only arm calculator
What is an interest-only ARM?
An adjustable mortgage where, for an initial period, you pay only interest. The balance stays flat, payments are low, and both a rate reset and a payment jump loom at the end of the IO period.
Why does the payment jump so much?
When the interest-only period ends, the entire balance must amortize over fewer remaining years — and the rate may have risen too — so the payment can increase sharply.
Do I build equity with an interest-only ARM?
Not through payments — the balance stays the same. Equity grows only if the property appreciates or you make voluntary principal payments.
Is the Interest Only ARM Calculator free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.