Amortization Calculator

An amortization calculator applies the annuity payment formula to a loan and shows how each payment divides between interest and principal over the term. DSCR calculators embed the same formula to compute the principal and interest portion of the denominator.

On a fully amortizing 30-year loan the payment is fixed, but early payments are mostly interest and late payments mostly principal. At 7.5%, the first payment on $375,000 is about $2,344 of interest and $278 of principal.

For DSCR the split does not matter; only the total payment does. What matters is the term. A 30-year amortization produces a lower payment and a higher DSCR than a 25-year one. A 40-year term, offered by some DSCR lenders, lowers it further. And an interest-only period removes the principal portion entirely, which is the most common way lenders lift a ratio that is near the line.

Further reading: Amortization Calculator on Wikipedia.