Rental property financing calculator
Find the constraint.
Plan the equity.
How much debt can the building carry? Compare the limits from income and value, then see how changes in income, value or rate affect your financing.
Acquisition financing · CAD · Monthly payments
Open Financial Inc. | FSRA Mortgage Brokerage Licence #13362
02 / Read the constraint
A higher valuation doesn’t always mean a larger loan.
Income may set the ceiling first. Enter your rate and calculate to compare the two limits—and see the cash you would still need.
The method
Two limits.
One capital plan.
The calculator compares the loan your rental income can support with the loan supported by the property value. It uses the lower amount, capped at your total project cost.
1. Income limit
Annual net operating income ÷ required debt service coverage ratio = annual debt-service budget. The calculator converts that budget into a fully amortizing loan using your interest rate and amortization.
2. Value limit
Lending value × your loan-to-value limit = the value-based ceiling. A property with a higher valuation may still be limited by its income.
3. Cash requirement
Purchase or project cost + other costs − estimated loan = cash required. Add fees, taxes, reserves and any premium payable in cash to your cost estimate.
The numbers in practice
With $240,000 in annual NOI and a 1.25× coverage requirement, the annual debt-service budget is $192,000, or $16,000 a month. At a $4 million property value and 75% LTV, the value ceiling is $3 million. Your rate and amortization determine whether income supports that much debt.
Calculation details
For a nominal annual rate j with m compounding periods per year, the effective monthly rate is i = (1 + j/m)m/12 − 1. For n monthly payments, the payment per dollar borrowed is i ÷ [1 − (1 + i)−n]. At zero interest it is 1/n. The income limit is the monthly debt-service budget divided by that payment factor.
Payments occur at month-end. The model holds the entered rate constant over the amortization period; a renewal may change the rate.
This calculator covers acquisitions with monthly principal and interest payments. It uses the costs and financing limits you enter. Construction draws, interest-only terms, financed insurance premiums and refinance payouts need a separate calculation. Zero or negative NOI supports no debt in this calculation.
Sources and further reading
- BDC: debt service coverage ratio — explains cash flow relative to debt service. This property model uses NOI, rather than business EBITDA.
- CMHC: standard rental housing — rental housing program details and eligibility.
Put the estimate in context.
Compare rental financing routes →
Understand the different jobs of insured, direct, conventional and bridge financing.
Prepare the permanent take-out →
Connect the operating evidence, project timeline and refinancing plan.
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See what Open Financial needs to assess your building and financing purpose.