One of the most common things buyers hear is: “Don’t worry — you’ll get a free month before your first mortgage payment is due.”

It sounds great, but here’s the truth: it’s not really free. It’s just how mortgage interest works.

Why It Looks Like a Free Month

Let’s say you close on July 15th.

• Your first mortgage payment won’t be due until September 1st.
• That feels like you skipped August, right?

But what actually happened is this: mortgage interest is paid in arrears (for the month that just passed). Your September 1st payment is covering August.

So what about those 16 days in July? That’s collected at closing as short interest.

Example: $400,000 Loan at 7%

• Daily interest = about $77
• July 15–31 = 16 days
• Short interest due at closing = $1,232

So yes, you didn’t make a full mortgage payment in August, but you still paid for those July days — just upfront at closing.

Why This Matters for Buyers

That “free month” isn’t free at all. It’s just a timing shift. And if you close earlier in the month, your short interest bill will be higher.

The Real Benefit

While it’s not truly free, the delayed first payment does give you breathing room. Moving expenses, furniture shopping, and utility deposits can eat up a lot of cash in those first weeks. Having a gap before your first full mortgage payment can help.

House Karma Tip

Don’t fall for the “free month” sales pitch. The money’s still being paid — just in a different way. Plan for short interest as a closing cost, and use the payment gap to your advantage for moving and settling in.

Bottom line: You don’t get a free month, but you do get a little financial breathing room. Just make sure you budget for short interest so you’re not surprised.