A stochastic interest rate model is an important ingredient in the valuation of callable mortgage bonds. Its role is to generate future interest rate scenarios where a prepayment model can be used to calculate how many borrowers call their loans, thereby generating future payments from the mortgage bond. The Extended Vasicek/Hull-White model is used. This chapter reviews the model and derives important elements for both constant spot rate volatility and when spot rate volatility is given as a step function. Formulas for the instruments used to calibrate the model and an approximation formula for swaptions are derived. These expressions are then used to calibrate the model.