Investment property mortgage calculator
Enter the price, down payment, rate and term to see the monthly principal and interest, the full payment with tax and insurance, and the total interest over the life of the loan.
Monthly principal and interest
$1,496.93
- Down payment
- $75,000
- Loan amount
- $225,000
- Tax and insurance, monthly
- $425.00
- Full monthly payment
- $1,921.93
- Total interest over the loan
- $313,895
How it is calculated
Payment = P × r ÷ (1 − (1 + r)^−n)
- P
- The loan amount: purchase price minus down payment.
- r
- The monthly interest rate: the annual rate divided by 12.
- n
- The number of monthly payments: the term in years times 12.
Worked example
- A $300,000 rental bought with 25% down leaves a $225,000 loan.
- At 7% over 30 years, the monthly rate is 0.5833% and there are 360 payments. Principal and interest come to $1,496.93 a month.
- Adding $300 for property tax and $125 for insurance gives a full payment of $1,921.93.
- Over 30 years the loan costs $313,895 in interest, which is more than the amount borrowed.
How investment property loans differ
Loans on rentals usually cost more than loans on a home you live in. Lenders commonly ask for a larger down payment, often 20% to 25%, and charge a higher interest rate, because borrowers under pressure tend to stop paying on a rental before their own home.
Lenders may also want cash reserves covering several months of payments, and some count a share of the expected rent as income when qualifying you. Terms vary between lenders, so collect more than one quote.
A shorter term raises the monthly payment and cuts total interest sharply. Try 15 and 30 years in the calculator to see the trade between cash flow now and interest paid over time.
Common questions
How much down payment do I need for an investment property?
Conventional lenders commonly require 15% to 25% down on a rental, with better rates at 25%. Requirements depend on the lender, the loan program, your credit and the number of units.
Are interest rates higher on investment properties?
Usually, yes. Rates on rental property loans tend to run above rates for owner-occupied homes because lenders see more risk of default.
What is included in the monthly payment?
Principal and interest go to the lender. Property tax and homeowner’s insurance are often collected with the payment and held in escrow. This calculator shows the payment both with and without them.
Does this include mortgage insurance?
No. Mortgage insurance is generally not offered on investment property loans the way it is on owner-occupied homes, which is one reason lenders require larger down payments.