Mortgage Per Diem Calculator

When closing on a mortgage, you might be surprised to see a line item called per diem interest. This is the daily interest owed on your mortgage between the closing date and the day your first regular monthly payment begins. The Mortgage Per Diem Calculator helps borrowers estimate how much interest will accrue during this short period, ensuring no surprises at closing.

Formula

The formula for per diem interest is straightforward:

Per Diem Interest = (Loan Amount × Annual Interest Rate ÷ 100) ÷ 365

Total Per Diem Interest = Per Diem Interest × Number of Days Until First Payment

How to Use the Calculator

1. Enter your loan amount.
2. Input your annual interest rate.
3. Add the number of days between closing and your first scheduled payment.
4. Click calculate to see daily interest charges and total per diem interest.

Example

Imagine you close on a $250,000 mortgage with a 6% annual interest rate.

• Daily Interest = ($250,000 × 6% ÷ 365) ≈ $41.10 per day
• If your first payment is due in 20 days, Total Per Diem = $41.10 × 20 = $822.

This amount will typically be collected at closing.

FAQs About Mortgage Per Diem Calculator

1. What is per diem interest?
   It is the daily interest charged on your mortgage between closing and your first payment date.
2. Why do lenders charge per diem interest?
   Because interest accrues daily, and the lender must account for the days before your first full monthly payment.
3. Is per diem interest extra money?
   No, it is simply interest you would owe anyway, just collected upfront.
4. Does everyone pay per diem interest?
   Yes, anyone with a mortgage closing will typically pay it.
5. Can I avoid per diem interest?
   No, but you can minimize it by choosing a closing date near the end of the month.
6. Does the calculator include principal payments?
   No, it only calculates daily interest.
7. Why does the formula use 365 days?
   Because most lenders calculate interest on a 365-day year basis.
8. What if my lender uses a 360-day year?
   Some lenders do—this calculator assumes 365, but you can adjust the formula if needed.
9. Does per diem affect my first monthly payment?
   No, your first monthly payment will still cover a full month’s interest plus principal.
10. Is per diem interest tax-deductible?
    Yes, mortgage interest is generally tax-deductible if you itemize.
11. Does per diem apply on refinances?
    Yes, refinance closings also require per diem interest payments.
12. What’s the average per diem amount?
    It depends on your loan size and rate, but often $20–$50 per day.
13. How do I estimate per diem manually?
    Multiply your loan balance by the rate, divide by 365, then multiply by days.
14. Do FHA and VA loans charge per diem interest?
    Yes, all traditional mortgage products calculate per diem interest.
15. Can I roll per diem interest into the loan?
    Typically no—it must be paid at closing.
16. Is per diem the same as prepaid interest?
    Yes, the terms are often used interchangeably.
17. Does paying per diem early reduce my loan balance?
    No, it only covers interest, not principal.
18. Can per diem be refunded if closing is delayed?
    It may be recalculated based on the new closing date.
19. Does this calculator work for interest-only loans?
    Yes, the per diem interest calculation is the same.
20. Why is understanding per diem important?
    So you can budget accurately for closing costs.

Conclusion

The Mortgage Per Diem Calculator is a simple but powerful tool for borrowers preparing to close on a mortgage. By calculating daily interest charges, it helps you anticipate how much prepaid interest will be due at closing. Planning ahead with this knowledge can prevent last-minute surprises and ensure a smoother transition into homeownership.