Mortgage Loan Constant Calculator
Calculate mortgage loan constant by dividing annual debt service by loan amount, with optional basis-point stress for sensitivity testing.
Educational and planning use only. Confirm all payment assumptions against lender term sheets and closing documents.
Examples
- Annual debt service $920,000.00 and loan amount $10,000,000.00 => Loan constant 9.20%.
- Annual debt service $1,140,000.00, loan amount $12,000,000.00, 75 bps shock => Loan constant 9.57%.
FAQ
How is loan constant different from interest rate?
Loan constant includes both interest and amortizing principal, so it is usually higher than the nominal interest rate for amortizing loans.
Can I compare loan constant across lenders?
Yes, as long as loan term, amortization structure, and fees included in debt service are treated consistently.
Why is loan constant useful in real estate underwriting?
It links financing terms to property cash flow and helps assess whether NOI comfortably covers required debt payments.
Additional Information
- Loan constant equals annual debt service divided by loan amount and is expressed as a percentage.
- Optional stress in basis points defaults to 0 and can be left blank without affecting base calculations.
- Use the same debt-service basis as your underwriting model, including principal and interest but excluding reserves unless contractually required.