DEBT GUIDE

What Is a Loan Constant?

A loan constant is annual scheduled debt service divided by original loan principal.

What the analysis measures

For an amortising loan, calculate the level payment from rate and amortisation, multiply by twelve and divide by principal.

An interest-only loan constant approximates the interest rate, while amortisation makes the constant higher than the coupon.

Match payment frequency, compounding and rate convention. Fees are normally outside the contractual debt service constant unless specified.

Use the constant to convert a DSCR limit into loan capacity: NOI ÷ minimum DSCR ÷ loan constant.

CLEAR ANSWERS

What does “What Is a Loan Constant?” explain?

A loan constant is annual scheduled debt service divided by original loan principal.

Which assumptions matter most?

Review the inputs connected to loan constant, mortgage constant, DSCR capacity and test them together rather than one at a time.

Should I use a calculator or a full model?

Use a calculator for a fast screening result and a full model when timing, financing, operating detail and sensitivities affect the decision.

Can this guide replace professional advice?

It is educational and does not replace deal-specific investment, accounting, tax, legal or lending advice.

Are the linked tools free?

All calculators and guides are free. Full Excel models are priced individually and as a complete library.