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Per Diem Interest Calculator

Calculate daily interest and the prepaid interest collected at closing, and see how the closing date changes it.

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Free · No sign-up · Runs in your browser

Prepaid interest is one of the more confusing lines on a closing statement. It covers the days between closing and the end of the month, because the first regular payment is not due until the first of the following month - which is also why there appears to be a month with no payment after closing.

The arithmetic is simple and the explanation is what borrowers usually want. This calculates the daily figure, the days charged, the total collected and the first payment date, and shows what closing later in the month would change.

Your numbers

Results update as you type. Nothing is sent anywhere.

Result

Prepaid interest at closing

$947

Per diem interest
$67.67
Days charged
14
First payment due
2026-06-01
Days in the closing month
30
Prepaid interest if closing on the last day
$68
Cash at closing saved by closing later
$880
One month of interest
$2,058

Prepaid interest covers the days between closing and the end of the closing month. The first regular payment is normally due on the first of the following month, which is why there is no payment in the month immediately after closing.

Closing late in the month reduces prepaid interest at the closing table. It does not reduce the cost of the loan - it simply moves the same interest into the normal payment cycle a few days sooner.

Some lenders use a 360-day basis. The basis is shown as an input because it changes the daily figure.

This is an estimate based on the figures you entered. Actual terms, fees and eligibility are set by the lender.

How to use the per diem interest calculator

  1. Enter the loan amount and the interest rate.
  2. Enter the expected closing date.
  3. Set the day basis your lender uses - most use 365.
  4. Read the per diem, the days charged and the total collected at closing.

What people use this for

  • Explaining the prepaid interest line to a borrower before closing.
  • Estimating cash to close more accurately.
  • Showing what moving a closing date does to the closing statement.
  • Checking a closing disclosure against the expected figure.

Worked examples

Every figure below is produced by running this calculator against the example inputs, so the numbers always match the tool.

A closing in the middle of the month

$380,000 at 6.5%, closing on 17 April 2026.

Prepaid interest at closing
$947
Per diem interest
$67.67
Days charged
14

The same loan closing near month end

$380,000 at 6.5%, closing on 29 April 2026.

Prepaid interest at closing
$135
Days charged
2
First payment due
2026-06-01

Why there is a month with no payment

Mortgage interest is paid in arrears. Closing in the middle of April means April interest is collected at closing, May interest accrues through May, and the first payment - covering May - is due on 1 June. To a borrower it looks like a free month; it is simply interest already collected.

Understanding that in advance removes one of the more common closing-table surprises.

Closing later reduces cash at closing, not cost

Closing on the twenty-ninth rather than the third cuts prepaid interest substantially, which helps a borrower who is short of cash. It does not make the loan cheaper - the same interest is simply collected through the normal payment cycle instead.

It is a cash-flow decision, and worth presenting as one rather than as a saving.

The day basis matters

Most lenders divide the annual interest by 365 to get a daily figure; some use 360, which produces a slightly higher per diem. The difference is small on a single closing and not zero.

The basis is an input here rather than an assumption, because it varies and because it is stated in the loan documents.

Methodology and assumptions

What this calculator does, and what it deliberately does not do.

  • Per diem interest is the loan amount multiplied by the annual rate and divided by the day basis you select.
  • Days charged run from the closing date to the end of that month.
  • The first payment date is assumed to be the first of the month after next, which is the standard convention.
  • Individual lenders and closing agents may compute prepaid interest slightly differently; the closing disclosure is authoritative.
  • Results are estimates. Real quotes depend on credit, income, property, loan programme and lender pricing at the time of application.
  • Nothing you type is transmitted or stored - the calculation runs entirely inside your browser.

This calculator is provided for informational and educational purposes only. Results are estimates and may not reflect actual rates, fees, taxes, or market conditions.

This website is not a lender, a mortgage broker or a financial adviser. It does not originate loans, does not accept applications and does not forward your details to anyone.

Actual loan terms depend on credit history, income, the property, the loan programme and lender pricing at the time of application. Only a lender can tell you what you qualify for.

Frequently asked questions

Is prepaid interest an extra cost?

No. It is ordinary interest for the days you hold the loan before the payment cycle starts. It is collected at closing rather than added to the loan.

Should a borrower close at the end of the month?

It reduces cash needed at closing. It does not reduce the total cost of the loan, and it should not override more important scheduling considerations.

Why is my first payment more than a month away?

Because interest is paid in arrears and the closing month has already been collected. The first payment covers the following full month.

Can prepaid interest be a credit?

On some transactions structured around a specific closing date, an interest credit can appear instead. That is lender-specific and outside what this calculates.

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