Apartment Mortgage Calculator
A helpful apartment mortgage calculator that shows monthly principal and interest payments over time as well as amortization and balloon payments where applicable.
How to read the payment figure
The calculator above sizes principal and interest on an apartment loan, plus the interest-only payment and the balance left at maturity. Enter the loan amount and rate, set the amortization and term, and the schedule below breaks the payments into interest and principal year by year.
The structure presets set the term, amortization and interest-only period for the executions this desk places most often, so you can see what the same loan amount costs under a Fannie Mae ten-year, a Freddie Mac small-balance seven-year, or a fully amortizing HUD 223(f).
The most important thing to keep in mind about the monthly payment figure given as a result is that it only represents the principal and interest portion of a loan payment. Depending on the terms of the apartment loan deal and / or the lender involved, the financing may have factored escrow for taxes, replacement reserves, etc. into the monthly payments to be made over the life of a loan. These figures should also be given great consideration to get a more precise estimation of the expected monthly payment.
Many prospective borrowers and investors may find using the apartment loan calculator helpful while shopping around for apartment properties in order to determine affordability. The calculator can also be an invaluable tool when refinancing an existing multifamily property loan. An amortization schedule included with the calculator depicts the proportions of interest versus principal of each payment over the selected term (while the value of each monthly payment remain the same, the interest portion typically starts high and is gradually reduced over the life of a loan, with the very last payments on a note being comprised of mostly, if not all, principal), which is an often overlooked or underplayed aspect when calculating monthly payments. There are quite a few cases in which the amortization impacts the borrower more so than the actual interest rate.
Our apartment property mortgage calculator will help you determine:
- Principal and Interest (P&I) payments
- Interest-only (i/o) payments
- Balloon payments
The term “principal” represents the loan amount being applied for. While this value can be estimated to a reasonable closeness, it truly depends on what the lender deems you are eligible to borrow based on the scrutiny of your current finances and future business prospects. Also taken into consideration when factoring the principal amount is how much revenue the property will yield (a metric referred to as Net Operating Income) and how much your total assets cover in relation to your total debt, or “loan to value” ratio (LTV), among other factors. Apartment loans are not priced off the federal funds rate. Fixed-rate agency, bank and life company debt is quoted as a spread over the Treasury of matching term, and floating-rate bridge debt as a spread over SOFR. The spread itself moves with leverage, debt service coverage, market, property condition and sponsor track record, which is why a rate quoted on someone else’s deal rarely transfers to yours.
A balloon payment schedule typically sees the borrower paying off the loan in small increments over the life of the loan with much larger balloon payments at designated times throughout the loan term. Balloon payments can deal a huge blow to your finances, so due diligence must be done to ensure that your cash flow is prepared to handle balloon payments with ease throughout the duration of your loan.
Term and amortization are not the same thing, and conflating them is the most common mistake in sizing a deal. Amortization is the schedule the payment is calculated on, and it usually runs 25 to 30 years, or up to 35 or 40 on HUD-insured debt. The term is how long the loan actually runs before it comes due, typically 5, 7, 10 or 12 years on agency and bank debt. The gap between the two is the balloon.
Related Questions
How can net operating income (NOI) influence the amount of an apartment property loan?
Net operating income (NOI) is one of the key factors that lenders consider when offering apartment financing. The NOI indicates the amount of revenue that a property has after covering operating costs, which helps lenders determine a borrower's ability to service debt.
What is DCR?
A debt coverage ratio, also known as a debt service coverage ratio or DSCR, is a financial metric used by lenders to quantify a borrower's ability to service a loan. The DCR is calculated by dividing the annual net operating income (NOI) of a property by the annual cost of servicing the debt.
Mortgage Payment Calculator
Principal and interest only. Taxes, insurance, and reserves are excluded.