Mortgage Calculator

A mortgage calculator computes the periodic payment on a loan from the principal, interest rate and term using the annuity formula. It is the companion tool to a cap rate calculator: cap rate describes the property before financing, and the mortgage calculator supplies the debt service that turns cap rate into cash flow and DSCR.

At 7.25% over 30 years the payment on each $1,000 borrowed is about $6.82 a month, or $81.86 a year, which is the mortgage constant of 8.2%. Multiply by the loan amount and you have annual debt service.

Cap rate minus the mortgage constant, scaled by leverage, is the investor's cash return on equity. NOI minus debt service is cash flow. NOI divided by debt service is DSCR. All three need the mortgage calculator's output, which is why a property investment calculator bundles the two tools and why cap rate on its own says nothing about whether you can afford to hold a property.

Further reading: Mortgage Calculator on Wikipedia.