Question 1

What does this mortgage and loan payment calculator compute?

Accepted Answer

You enter the loan amount, interest rate, amortization years, loan term, and any interest-only months. It returns the monthly payment, annual debt service (the monthly payment times twelve), total interest over the term, the loan constant, and a period-by-period amortization schedule. When the loan term is shorter than the amortization period, it also returns the balloon balance, the principal still outstanding at the end of the term.

Question 2

How is the monthly mortgage payment calculated?

Accepted Answer

The payment comes from the mortgage constant, which spreads the loan amount across the amortization period at the stated interest rate so each payment covers interest on the outstanding balance plus a portion of principal. The calculator sizes the level monthly payment, then builds the schedule by splitting each payment into interest and principal. Interest-only months pay interest alone, so principal does not reduce during that window.

Question 3

What is a balloon balance and a loan constant?

Accepted Answer

The balloon balance is the principal still owed at the end of a loan term that is shorter than the amortization period, the lump sum payment due at maturity. The loan constant is annual debt service divided by the original loan amount, expressed as a rate that lets you compare the yearly cash cost of debt across loans. Whether either figure works for a given deal depends on the market, asset class, lender program, and risk profile.

Mortgage & Loan Payment Calculator

ProForma School

Resources

Course Info

Legal