Calculate prepaid interest using dates and rate. View per-diem costs with 360 or 365 basis. Download a report for closing files and budgeting today.
| Loan amount | Rate | Closing | First payment | Basis | Days | Prepaid interest |
|---|---|---|---|---|---|---|
| $250,000 | 7.25% | 2026-02-19 | 2026-03-01 | 365 | 10 | $496.58 |
| ₨5,000,000 | 18.00% | 2026-02-19 | 2026-03-10 | 360 | 19 | ₨47,500.00 |
Per-diem interest = Loan Amount × (Annual Rate ÷ 100) ÷ Day-Count Basis
Prepaid interest = Per-diem Interest × Number of Days
This calculator uses simple interest. Some lenders may use different rounding rules or include or exclude the closing day.
Prepaid interest covers the daily interest that accrues between your closing date and the day your regular payment schedule begins. Because most loans collect interest in arrears, lenders often require this upfront amount so the first scheduled payment can align to a standard billing cycle. The charge is not a fee; it is interest that would have accrued anyway, simply collected earlier for administrative consistency.
Many consumer mortgages use a 365-day basis, while some commercial or legacy products use a 360-day convention. With the same rate and principal, a 360 basis produces a higher per-diem amount because the annual interest is divided by fewer days. Confirm the basis on your loan estimate or closing disclosure, especially when comparing offers with similar nominal rates.
The number of days is usually the difference between the closing date and the first payment date. A closing late in the month can increase prepaid days if the first payment is set for the following month’s standard due date. Some lenders exclude the closing day, others include it, and a few apply holiday or weekend rules, so small differences are normal.
Per-diem interest is useful beyond closing. It helps borrowers estimate the cost of changing a closing date, extending a rate lock, or delaying disbursement. For refinances, it also helps explain why prepaid interest may be offset by interest credits or escrow adjustments. Tracking per-diem makes cash-flow planning more predictable and reduces last-minute surprises.
The CSV and PDF exports provide a compact record of inputs, assumptions, and outputs. Keep them with your loan file to support reconciliation, underwriting questions, or internal audit trails. If your lender provides official figures, treat those as authoritative; use this calculator to validate reasonableness, identify mismatched day counts, and document scenario comparisons clearly.
For adjustable-rate loans, rerun the calculation when the rate resets. For construction draws, compute prepaid interest for each funding tranche. Consistent documentation improves negotiations when disputing charges or requesting a revised first payment date with your lender.
1) Is prepaid interest the same as points or lender fees?
No. Prepaid interest is daily interest collected upfront for the period before your first payment. Points and fees are separate charges that affect pricing, underwriting, or compensation.
2) Which day-count basis should I choose?
Use the basis stated in your loan documents. If it is unclear, ask your lender or settlement agent. Choosing the wrong basis can slightly overstate or understate the per-diem amount.
3) Does the calculation include the closing day?
This tool counts full days between the two dates. Some lenders include the closing day or apply rounding. If your figures differ by one day, that convention is usually the reason.
4) Why does a later closing date sometimes increase cash to close?
If your first payment date stays fixed to a standard due date, closing later can increase the number of prepaid days. More days multiplied by the per-diem rate means higher prepaid interest.
5) Can I use override days instead of dates?
Yes. If your lender gives an exact prepaid-day count, enter it as override days. The calculator will use that number and skip date-based day counting for the interest computation.
6) Are the CSV and PDF exports official closing documents?
No. Exports are for planning and recordkeeping. Your closing disclosure, loan estimate, or settlement statement governs the final amounts, including any lender-specific rules or adjustments.
Important Note: All the Calculators listed in this site are for educational purpose only and we do not guarentee the accuracy of results. Please do consult with other sources as well.