Note: The monthly payment figure given as a result only represents the principal and interest portion of a loan payment.

Calculate Your Multifamily Mortgage Payments

An invaluable tool for multifamily investors is a commercial mortgage calculator, which is utilized to provide a simple estimate of the monthly payments that will be owed on a commercial real estate mortgage, broken down into interest and principal values.

Using the calculator is easy, regardless of a borrower’s level of experience with commercial financing. The only figures needed are the loan amount and interest rate, along with the amortization and term length. Simply input these figures into the designated fields to see the expected monthly payment figure over time.

Given the vast differences between lenders, loan products, and borrowing scenarios, the actual monthly payment amount tends to include items like escrow for taxes, replacement reserves, etc. factored into each monthly payment to be made over the life of a loan. Borrowers must pay great attention to these figures in order to get a more precise estimation of expected monthly payments. 

The loan calculator is particularly helpful while shopping around for properties in order to determine affordability. The calculator is also an incredibly useful 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 than the actual interest rate. 

Calculator Determinations

• Principal and interest (P&I) payments

• Interest-only payments

• Balloon payments

The principal represents your loan amount. The principal value is often one of the first figures discussed, but it truly depends on the scrutiny of a borrower’s current finances and future business prospects, and how all of that put together affects eligibility. There are other key considerations when factoring the principal amount, like how much revenue the property will yield. This metric, referred to as net operating income, is almost always a heavy point of scrutiny for lenders. In addition, the loan amount compared to the value of the property, or its loan-to-value ratio (LTV), plays a significant role in loan eligibility as well. 

In terms of interest, while there is no definitive correlation, the industry’s median interest rate for commercial property loans sits approximately 3% above the federal rate. This observation aside, the amount of interest that will be charged to any particular loan is largely dependent on the borrower’s financial strength and credit score, and the financial profile of the property in question. 

Loan terms for apartment properties typically range between 15 and 30 years. The loan term will affect the size of each expected monthly installment as well as how much interest would have been paid at the completion of repayment on the loan.

Balloon Payments

A balloon payment typically sees the borrower paying off the loan in small increments over the life of the loan, and then saddling them with a much larger “balloon” payment, usually at the end of the loan term.

An underprepared borrower can suffer huge losses to their finances from unexpected balloon payments, so due diligence must be done to ensure that if the loan product does include a balloon payment schedule, the borrower can handle these payments with ease throughout the duration of the loan.