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.
Mortgage Payment Calculator
Entering into an apartment loan transaction can be a daunting affair. Truthfully speaking, there really is no shortcut to getting the apartment loan financing you need. Even so, the team at Apartment.loans has a firm belief that having the right knowledge and tools at your disposal puts you in a much better position to get the financing you deserve, in a reasonable timeframe, and at a competitive price.
One such tool that is invaluable for multifamily investors is our commercial mortgage calculator, which is designed to help provide a simple estimate of the monthly payments that will be owed on an apartment property mortgage. Using the calculator is simple, regardless of a potential investor or borrower’s level of experience with apartment financing. All that is required is to input the loan amount and interest rate, then set the amortization and term length to see the expected monthly payment figure over time.
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. While there is no definitive correlation, the industry median interest rate for apartment property loans is approximately 3% above the federal rate. Beyond this, the amount of interest that will be charged to your unique loan is largely dependent on your financial strength and credit score.
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.
Loan terms for apartment properties are usually about 15-30 years. The loan term will affect whether your installments are big or small but they also affect how much you would have paid off in interest at the end of the loan.
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.Learn more →
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.Learn more →