A 30-year amortization means your payment is calculated as if you'll pay it off over 360 months, even if the loan balloons in 5. Longer amortization = lower payment, higher DSCR, more interest paid over the life of the loan.
Loan Mechanics
Amortization
The schedule that gradually pays down loan principal over time via level monthly payments.
More in Loan Mechanics
- DSCR (Debt Service Coverage Ratio)— The ratio of a property's net operating income to its debt payments — a 1.25 DSCR means th…
- LTV (Loan-to-Value)— Loan amount divided by the property's appraised value, expressed as a percent.
- LTC (Loan-to-Cost)— Loan amount divided by total project cost (purchase + rehab).
- ARV (After-Repair Value)— The projected appraised value of a property after planned renovations are complete.
- DTI (Debt-to-Income Ratio)— Your total monthly debt payments divided by gross monthly income.
- APR (Annual Percentage Rate)— The all-in yearly cost of a loan, including interest rate plus most fees.