What does the loan cost each month, and how much of that is interest? Enter price, down payment, rate, and term to see the payment and the split behind it.
Monthly payment
$2,571a month
$2,121 of it is the loan. In the first month, $1,859 of that is interest.
$2,121 of it is the loan. In the first month, $1,859 of that is interest.
The payment formula is M = P × [ r(1+r)^n ] ÷ [ (1+r)^n − 1 ], where r is the monthly rate and n is the number of payments. On a $340,000 loan at 7% over 30 years, r is 0.5833% a month and n is 360, which produces a principal and interest payment of about $2,262 a month, or $27,144 a year.
That figure is principal and interest only. A servicer usually also collects property taxes and insurance in escrow, though private mortgage insurance generally does not apply at the 20% to 25% down that rental financing requires. Taxes and insurance belong in operating expenses when you compute NOI, not in debt service, and putting them in both places is the most common double-count in rental analysis.
More than an owner-occupied purchase, commonly in the 20% to 25% range, with the exact requirement set by the lender and the loan program. House hacking a small multifamily you live in is the standard exception, and it follows owner-occupied rules instead.
Yes. Lenders price the added default risk of a property the borrower does not live in, and the premium appears as rate, points, or both. Because it varies by program, the useful comparison is between term sheets rather than against a national average.
Keep them out of debt service and inside operating expenses. They are already subtracted in NOI, so adding them to the payment as well double-counts them and understates DSCR and cash flow at the same time.
About $23,690 on a $340,000 loan at 7%, against $3,454 of principal. The ratio inverts slowly: by year ten this loan retires roughly $6,470 of principal a year.
It makes the monthly math work and the total cost worse. Forty years instead of thirty lifts this deal from a 0.97 DSCR to 1.03, which can be the difference between financeable and not, while adding ten years of interest payments.
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