Financing can make a property accessible, but the payment can also turn positive operating income into negative monthly cash flow.
The loan amount is the purchase price minus the down payment. The payment depends on the loan amount, interest rate, and term. Taxes, insurance, and association dues are separate costs and should be added to the monthly budget.
Cash-on-cash return uses annual cash flow after the mortgage divided by the cash invested. A larger down payment generally lowers the payment but increases the cash invested, so both sides of the calculation matter.
For a $250,000 property with 20% down, the loan is $200,000. If the mortgage payment is $1,297 per month and taxes, insurance, association dues, and reserves add $603, total monthly costs are $1,900. At $2,400 rent, estimated cash flow is $500 per month.
Rates and terms vary by borrower, property, occupancy, lender, and market. Treat the calculator’s mortgage number as a screening estimate and obtain a current loan quote before relying on it.
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