Free Amortization Calculator
Loan Amortization Calculator
Enter the loan amount, rate, and term to get the monthly payment, total interest, annual debt service, and a full year-by-year amortization schedule.
Loan terms
Result
Annual debt service feeds straight into DSCR. LendPipe carries it through spreading, screening, and the credit memo automatically.
Check the DSCRThe amortizing payment formula
A fully amortizing loan has a level payment that pays it off exactly over the term. The payment is:
Payment = L × i ÷ (1 − (1 + i)−n)
where L is the loan amount, i is the monthly rate (annual ÷ 12), and n is the number of monthly payments. Each payment covers interest first; the rest pays down principal.
Why early payments are mostly interest
Because interest accrues on the outstanding balance, the first payments on a fresh loan are heavily weighted toward interest. As the balance falls, more of each level payment goes to principal — which is why the principal column in the schedule grows every year while the interest column shrinks. For commercial loans with a balloon, the balance still outstanding at maturity is what the borrower must refinance or repay.
Using the schedule in underwriting
- Read the balloon balance at the maturity year for loans that amortize longer than they mature.
- Feed annual debt service straight into the DSCR test.
- Compare total interest across terms to weigh a lower payment against lifetime cost.
Frequently asked questions
How is a loan payment calculated?
The fixed monthly payment on an amortizing loan is P = L × i ÷ (1 − (1 + i)^−n), where L is the loan amount, i is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. Each payment covers that month's interest first, and the remainder reduces the principal balance — so early payments are interest-heavy and later payments are principal-heavy.
What is an amortization schedule?
An amortization schedule lists, for each period, how much of the payment goes to interest, how much goes to principal, and the remaining balance after the payment. It shows exactly how the loan is paid down over time. The schedule above summarizes this by year; lenders use it to see the balance at any point — useful for balloon structures, refinancing, and collateral release decisions.
What is the difference between the amortization term and the loan term?
The amortization term is the period used to calculate the payment — for example, payments sized as if the loan were paid off over 25 years. The loan (or maturity) term is when the loan actually comes due. Commercial loans frequently amortize over 20–25 years but mature in 5–10, leaving a balloon balance due at maturity. This calculator assumes the amortization term and maturity are the same; for a balloon, read the remaining balance from the schedule at the maturity year.
How does annual debt service connect to DSCR?
Annual debt service is simply the monthly payment times twelve, and it is the denominator of the debt service coverage ratio. Once you know a loan's payment, you can divide net operating income by the annual debt service to test whether the deal clears your DSCR policy. The calculator surfaces annual debt service directly so it flows straight into the DSCR check.
From payment to credit decision, automatically
LendPipe carries annual debt service through spreading, DSCR screening, and the credit memo — so the numbers you calculate here flow into the deal file without re-keying.
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