Precision Utility
Investment Property
Calculator
Typical Down
20-25%
Rate Premium
+0.5%
Evaluate whether a rental property investment makes financial sense. Enter the purchase price, down payment, mortgage rate, term, expected rent, property tax rate, insurance and HOA fees. The calculator shows your monthly mortgage payment, cash flow, gross yield, cash-on-cash return and a stress test at a higher rate. Built for US real estate investors.
Investment Parameters
Monthly Mortgage Payment
$0
Monthly Cash Flow
$0
Annual Rental Income
$0
Rental Yield
0%
Cash-on-Cash Return
0%
Loan Amount
$0
Total Monthly Cost
$0
Stress Test (Rate + 2%)
$0
--How the investment property calculator works
Start by entering the purchase price and your down payment amount. The calculator determines the loan amount automatically and uses a standard amortization formula to compute your monthly mortgage payment.
Next, enter the expected monthly rent, property tax rate, insurance cost and any HOA fees. The calculator combines the mortgage payment with these carrying costs to show your total monthly expense, then subtracts it from rent to reveal your monthly cash flow.
Gross rental yield shows annual rent as a percentage of the purchase price. Cash-on-cash return measures annual cash flow against your total down payment, giving you the true return on the money you invested.
The stress test checks whether the property stays cash-flow positive if mortgage rates rise by 2 percentage points. This helps you evaluate risk before committing to a purchase.
What you need to know about investment property financing
Investment property loans come with stricter requirements than primary residence mortgages. Lenders view rental properties as higher risk, which means larger down payments, higher interest rates and tighter qualification criteria.
Key facts for US real estate investors:
- Down payment: Conventional loans typically require 15-25% down for investment properties, compared to 3-5% for a primary residence
- Higher rates: Expect investment property mortgage rates 0.5-0.75% above primary residence rates from the same lender
- Rental income qualification: Lenders usually count only 75% of expected rental income when calculating your debt-to-income ratio
- Property taxes: Range from 0.5% to over 2.5% of assessed value annually, varying significantly by state and county
- Landlord insurance: Typically 15-25% more expensive than a standard homeowner's policy
- Maintenance reserve: Budget 8-10% of annual rent for repairs and upkeep
- Vacancy allowance: Plan for 5-8% vacancy rate depending on your local market
- Property management: Professional managers typically charge 8-12% of monthly rent
This calculator uses a fixed-rate amortizing mortgage formula. Adjustable-rate mortgages (ARMs) may offer lower initial payments but carry interest rate risk over time. Always compare total cost of ownership before purchasing an investment property.
Frequently asked questions
How much down payment do I need for an investment property?
Most conventional lenders require 15-25% down for an investment property, compared to 3-5% for a primary residence. A 25% down payment typically secures better rates and avoids private mortgage insurance (PMI).
How do lenders count rental income for an investment property mortgage?
Most lenders count only 75% of expected rental income when qualifying you for an investment property loan. This 25% haircut accounts for vacancies and maintenance costs. You typically need a signed lease or a rent appraisal.
What is cash-on-cash return for rental property?
Cash-on-cash return measures annual pre-tax cash flow as a percentage of total cash invested (down payment plus closing costs). For example, $6,000 annual profit on a $50,000 down payment equals a 12% cash-on-cash return.
Are investment property mortgage rates higher than primary residence rates?
Yes. Investment property mortgage rates are typically 0.5-0.75% higher than primary residence rates. Lenders view rental properties as higher risk since borrowers are more likely to default on a non-primary residence during financial hardship.
What is a good rental yield for an investment property?
A gross rental yield of 6-10% is generally considered strong in the US market. Yields vary by location — Midwest and Southern markets often deliver higher cash flow yields, while coastal cities tend to offer lower yields but stronger appreciation.
What ongoing costs should investment property owners budget for?
Budget for property taxes (0.5-3% of value annually), landlord insurance, maintenance and repairs (8-10% of annual rent), vacancy allowance (5-8%), property management fees (8-12% of rent), and HOA fees if applicable.
How do I calculate rental yield on an investment property?
Gross rental yield equals annual rent divided by the purchase price, times 100. For example, $18,000 annual rent on a $250,000 property gives a 7.2% gross yield. Net yield subtracts costs like taxes, insurance and maintenance.