How much does I/O improve cash flow?

On a $2M loan at 7% for 30 years: fully amortizing payment = $13,306/month; I/O = $11,667/month. Cash flow improvement = $1,639/month or $19,668/year.

What happens when I/O period ends?

Payments jump significantly when amortization starts on remaining term. Model the full debt service after I/O period to ensure deal still cash flows.

When do lenders offer I/O?

I/O is common on agency multifamily loans, CMBS, and balance sheet loans. Borrower must demonstrate deal is viable with full amortization as well.

Interest-Only Period Cash Flow Benefit Calculator

Calculate cash flow improvement during interest-only period vs fully amortizing loan. Model I/O benefit on CoC return and impact when amortization begins.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate cash flow improvement during interest-only period vs fully amortizing loan. Model I/O benefit on CoC return and impact when amortization begins. Use the i/o period cash flow result to inform your calculation.

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Frequently Asked Questions

How much does I/O improve cash flow?

What happens when I/O period ends?

When do lenders offer I/O?