Calculator guide
Mortgage Payment Calculator
Mortgage payment math determines the debt service that often makes or breaks rental property cash flow.
What the metric means
Mortgage payment math determines the debt service that often makes or breaks rental property cash flow.
Formula
Where:
- Loan Amount
- Purchase price minus down payment
- r
- Monthly interest rate = annual rate ÷ 12
- n
- Total number of payments = loan term in years × 12
Example:
- Loan Amount = $240,000
- Annual rate = 7.0% → monthly rate r = 0.07 ÷ 12 = 0.005833
- Loan term = 30 years → n = 360 payments
- Step 1: Numerator = 0.005833 × (1.005833)^360 = 0.005833 × 8.116 = 0.04734
- Step 2: Denominator = (1.005833)^360 − 1 = 8.116 − 1 = 7.116
- Step 3: Monthly P&I = $240,000 × (0.04734 ÷ 7.116) = $240,000 × 0.006653
- Step 4: Monthly P&I ≈ $1,597/month
A $1,597/month P&I payment is the largest fixed expense in most rental property cash flow models — and among the most sensitive to interest rate changes.
How DealPrism uses it
DealPrism uses the standard amortizing loan formula for principal and interest, then layers PMI if applicable to produce monthly debt service.
Common mistakes
- Forgetting that a lower down payment increases both debt service and risk.
- Comparing deals with outdated rate assumptions.
- Treating taxes and insurance as part of principal and interest math.
Related FAQs
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See this metric in context with your purchase price, rent, expenses, and financing assumptions.
Analyze your own dealDealPrism provides educational analysis based on available data and user assumptions. Results are estimates and may change if rent, taxes, insurance, financing, or other inputs are updated. This content is not financial, legal, tax, or investment advice.