How Does FHA Per Diem Interest Work?

Do I make a mortgage payment at settlement?

Per diem interest calculatorWhen you close or settle your loan, you will pay interest on the loan from the settlement date to the end of the month. Per diem interest is a fancy way of saying you are paying interest per day or per diem.

If you close on the 15th day of the month, you will pay the lender 15 days interest, assuming there are 30 days in the closing month. The day you close is included in the calculation.

How Is Per Diem Calculated?

The formula is very simple. Multiply the loan amount by the interest rate, then divide the total by 365 days. The result is the per diem cost of the loan. Now multiply the daily interest rate by the number of days in the settlement month. Here's an example of the calculation:

Loan Amount X Interest Rate = Total Interest Number of Days in a Year Daily Interest Cost Multiply by = The number of days owed Total per diem interest paid
$100,000 3.00% $ 3,000 365 Days $ 8.22 X 16 Days = $ 131.51

  Loan Amount  
  Interest Rate  
  Annual Proration  
  Number of Days  
  Daily Interest