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Interest-only vs amortizing loan calculator

On an illustrative $2,000,000 loan at 6.50%, interest only costs $10,833.33 a month against $12,641.36 on a 30-year amortization: $1,808.03 a month less, but the whole $2,000,000 is still owed at maturity instead of $1,695,523. Compare the structures for your loan below, including how Actual/360 interest changes the bill month to month.

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The loan
10-year Treasury 4.94% (October 30, 2026) plus a 154 bps spread (CRED iQ, permanent loans at 60 to 65% LTV, as of March 31, 2026).

Monthly saving with interest only

$1,808.03

–

Full IOPartial IOAmortizing

Actual/360 interest on the full loan, by month length

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The trade in one table

Illustration: $2,000,000 at 6.50%, 10-year term.

Interest only30-year amortization
Monthly payment (30/360)$10,833.33$12,641.36
Annual debt service$130,000$151,696
Balloon at year 10$2,000,000$1,695,523
Interest paid over 10 years$1,300,000$1,212,486

Interest only costs more interest in total because the balance never falls; amortizing costs more cash each month. Which is better depends on what you do with the monthly difference and on the balloon you can refinance.

Who offers interest only, and on what terms

Actual/360: the interest you do not see in the rate

Actual/360: interest = balance x rate / 360 x actual days in the month5. 30/360: interest is computed on twelve 30-day months, so every monthly interest amount is the same5. Over a 365-day year, Actual/360 collects 365/360 of the stated rate: a 6.50% note effectively charges about 6.590%. On the illustration loan, interest in a 28-day month is $10,111.11 and in a 31-day month $11,194.44.

Real loan documents show it. A filed Fannie Mae schedule on an interest-only advance shows $299,348 after a 31-day month on an $80,284,000 interest-only advance at 4.33%5 and $270,379 after a 28-day month on the same $80,284,000 advance at 4.33%5. A filed Freddie Mac note sets interest at $2,363.56667 times the days in the prior month on a $21,930,000 interest-only note at 3.880%6. The calculator reproduces both to the dollar. On an amortizing Actual/360 loan the payment is fixed, so the split moves instead. On an amortizing Actual/360 loan the fixed payment's interest share rises in 31-day months and principal falls6. Which convention applies is in your note. Actual/360 is standard on Freddie Mac Conventional Small; 30/360 is available3.

Edge cases

Method and formula

interest-only payment (30/360) = L x r / 12 interest-only interest (Actual/360) = L x r / 360 x days in the month amortizing payment = L x i / (1 - (1 + i)^-n), i = r / 12 partial IO: L x r / 12 for the IO months, then the amortizing payment on the full L; balloon after (term - IO) payments effective annual rate under Actual/360 = r x 365 / 360

Questions people ask

Is an interest-only commercial loan a good idea?

It helps cash flow and returns while you add value or lease up, and it is standard on many CMBS and some agency loans at lower leverage. The cost is a larger balloon and no equity built through payments, so it suits a plan that raises value or a hold short enough that paydown would not matter much.

Does interest only let me borrow more?

Only with lenders that size on the interest-only payment. Many, including Freddie Mac on Conventional Small, test coverage on an amortizing payment, so the loan amount stays the same and only the payment drops. Agencies also limit full-term interest-only to lower leverage.

Why does my interest-only payment change every month?

Because the note charges interest on the actual days in each month over a 360-day year. A 31-day month costs more than a 28-day month. Under 30/360 every month would be the same.

  • Commercial mortgage calculatorMonthly payment, balloon at maturity, interest-only period and annual debt service on a commercial mortgage, priced from today's Treasury or SOFR reading.
  • Amortization scheduleMonth-by-month and yearly amortization for a commercial loan: interest, principal, balance and balloon, with 30/360 or Actual/360 interest and CSV export.
  • DSCR calculatorDebt service coverage on your NOI and loan, the largest loan a lender's minimum DSCR allows, and how far income can fall before coverage breaks.
  • Refinance gap calculatorBalloon owed at maturity against the new loan today's rate, value and coverage rules allow: the cash gap to close and which test creates it.
  • CMBS conduit loansHow conduit CMBS loans are priced and sized in 2026, what SEC-filed pools show for LTV, DSCR and debt yield, and what defeasance costs to get out early.
  • Freddie Mac small balanceFreddie Mac retired its Small Balance Loan program in April 2026. What Conventional Small offers now, what changed, who lost out and where they go instead.
  • Value-add and renovationFinancing a value-add apartment or commercial renovation: bridge vs bank vs agency vs C-PACE, how the renovation budget is funded, and the exit math.

Sources

  1. BANK5 2026-5YR24 term sheet (FWP, SEC EDGAR, filed Aug 12, 2026), as of August 12, 2026
  2. CRED iQ, The Power of One: Why SASB Outruns Conduits 3 to 1 (Oct 22, 2026), as of September 30, 2026
  3. Freddie Mac Multifamily, Optigo Conventional Small Term Sheet, as of April 2026
  4. CFPB/FFIEC HMDA 2025 public data, multifamily originations (Data Browser), as of December 31, 2025
  5. Fannie Mae Form 6001.MCFA schedules and Form 6104.01 (05-20) Standard Yield Maintenance schedule, as filed with the SEC (New England Realty Associates 8-K, Ex. 10.1), as of June 16, 2022
  6. Freddie Mac Multifamily Note, Fixed Rate Yield Maintenance Only (Revised 5-5-2017), as filed with the SEC (Inland Residential Properties Trust, Ex. 10.41), as of July 27, 2017
  7. CRED iQ, CRE Loan Spreads Tighten Across Property Types (Apr 17, 2026), as of March 31, 2026
  8. Northmarq, Rates & Spreads (Multifamily Conventional), as of October 22, 2026
  9. KKR Real Estate Finance Trust 10-Q, Q3 2026, as of September 30, 2026
  10. Granite Point Mortgage Trust 10-Q, Q2 2026, as of June 30, 2026
  11. Blackstone Mortgage Trust 10-Q, Q3 2026, as of September 30, 2026
  12. U.S. Department of the Treasury, daily par yield curve rates, as of October 30, 2026
  13. Federal Reserve Bank of New York, as of October 30, 2026

How we check figures: methodology and editorial policy.

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