To calculate your interest-only mortgage payments, you’ll first convert your APR percentage to a decimal by dividing it by 100. Then, divide the result by 12 for the 12 months in a year. After that, you’ll multiply the result by your total loan balance to arrive at your monthly interest-only payment.
Here's how you would calculate your interest-only payments if you take out a $100,000 interest-only loan at 4% APR:
4 / 100 = 0.04
0.04 / 12 = 0.0033333 (repeating)
0.0033333 x 100,000 = $333.33
Your interest-only payment would be $333.33 per month. This number should be stable through the fixed-rate, interest-only period of your mortgage, but you’ll pay more once you have to start paying off your principal.