Why PITI matters more than P&I
Most mortgage calculators show P&I — principal and interest only. That's the number lenders quote in ads because it's the lowest. But it's not what you actually pay each month. Add property tax and insurance and you get PITI — the real cash that leaves your account. PITI typically runs 15-25% higher than P&I depending on your state's tax rate. Underwriting a deal on P&I-only math is the fastest way to make a deal look more profitable than it is.
The amortization formula
Where L = loan amount, r = monthly interest rate (annual rate ÷ 12), n= total months. Mortgages are fully amortizing — early payments are mostly interest, late payments mostly principal. On a 30-year mortgage at 7%, you don't cross the 50/50 principal-to-interest line until roughly year 19.
Investment property vs primary residence rates
Investment loans price 0.5-1.5% higher than owner-occupant loans. The spread covers the higher default risk lenders see on investment property — when borrowers hit financial trouble they default on rentals before their own home. Today that puts conventional 30-year fixed investment loans in the 7-8% range, vs. 6-7% for owner-occupant.
Down payment options
- 20% — the conventional minimum for 1-4 unit investment
- 25-30% — required for 5+ unit multifamily (commercial)
- 15% — possible on some DSCR loan products with rate penalty
- 0% / all cash — eliminates the financing piece entirely (use TrueCap's full analyzer for the cash-purchase math)
Don't forget escrow + PMI
On owner-occupant loans below 20% down, you typically pay PMI (private mortgage insurance) until equity hits 20%. Investment loans don't have PMI in the same form, but the higher rate effectively prices in similar risk. Always read the loan estimate carefully — the “monthly payment” on the disclosure includes everything the lender holds in escrow.
The full picture
A mortgage payment is just one input in a real underwrite. You also need to know your DSCR (does the property cover the payment?), cash-on-cash return (what does your money actually earn?), 10-year projection (does this compound?), and tax position (how much do you actually keep?). TrueCap's full analyzer runs all of those at once — free to start, no card required.