Use our Loan Constant Calculator to evaluate annual debt service, interest rate, and amortization. Calculate your mortgage constant easily with REIF Loans.
The Loan Constant Calculator helps investors and borrowers measure how much of a loan’s balance must be paid each year to cover both principal and interest.
Also known as the Mortgage Constant, this tool is essential for evaluating loan performance, property cash flow, and financing efficiency.
At REIF Loans, we make it easy to analyze your loan terms and understand how interest rates and amortization impact your annual debt service.
The Loan Constant (also called the Mortgage Constant) is a ratio that represents the annual loan payment required to fully amortize the debt, divided by the total loan amount.
It helps you understand the true annual cost of financing beyond just the interest rate.
Formula:
Loan Constant = (Annual Debt Service / Loan Amount) Ă— 100
Example:
If you have a $1,000,000 loan and make $80,000 in annual principal and interest payments, your loan constant is 8%.
This means 8% of the loan’s balance must be repaid every year to stay current on both principal and interest.
Calculate your Annual Debt Service and Loan Constant percentage based on loan amount, interest rate, and amortization period.
Our online Loan Constant Calculator allows you to estimate your annual debt service percentage in seconds.
Simply enter your loan amount, interest rate, and term and instantly see your mortgage constant and yearly payment amount.
The Loan Constant is derived from the loan’s interest rate and amortization period.
It shows how much of the loan’s value must be repaid annually, combining both interest and principal portions into one consistent measure.
Mathematical Formula:
Loan Constant = (Interest Rate / (1 – (1 + Interest Rate)^(-Term)))
This calculation highlights how shorter terms or higher rates increase the constant, while longer terms or lower rates reduce it.
For example, a 30-year loan at 6% has a lower constant than a 15-year loan at the same rate because the payments are spread out over a longer period.
Real estate investors use the Loan Constant to measure debt efficiency and risk.
It shows how much property income must go toward servicing the debt each year.
By knowing your constant, you can better align your loan with your property’s income potential.
Investors and lenders use the loan constant in several key ways when evaluating deals.
The loan constant gives you an apples-to-apples view of loan performance regardless of interest structure.
It shows what percentage of your loan must be paid annually to cover both principal and interest.
No. It includes principal repayment, so it’s always higher than the interest rate.
No. The loan constant only reflects debt service, not other expenses.
For most real estate loans, constants range between 6% and 10%, depending on rate and term.
Yes. The formula applies to all amortizing loans, including DSCR and commercial real estate loans.
Quickly determine your annual debt service and loan constant to make smarter real estate financing decisions.
Whether you’re comparing mortgage options, refinancing, or underwriting a property, our calculator provides clear, data-driven insights.
