Calculators
Rate cap calculator
Bridge and hard money loans are frequently priced off a floating index plus a margin, with a cap on how high the note rate can go. This shows the payment today against the worst case the cap actually allows.
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Index, margin and the cap itself are all assumptions — set them to the actual loan terms.
The note rate is index plus margin, held between the floor and the cap you enter. This shows the payment shock a floating structure can produce — it is not a prediction of where the index is actually headed.
What this measures and how it's computed
The note rate on a floating loan is the index rate plus the lender's margin, held within a floor and a cap: Note Rate = min(max(Index + Margin, Floor), Cap). This tool computes the monthly payment at today's note rate and again at the cap itself — the highest the payment can legally go for the life of that rate structure — and shows the dollar gap between the two. Where a monthly rent figure is entered, it also runs both payments through the same rent-to-payment comparison the DSCR calculator uses.
How it's used in an underwriting decision
A lender underwriting a floating-rate bridge or hard money loan typically qualifies the borrower or the property at something closer to the current note rate, not the cap — which means the file that clears at closing can look materially different once the index moves. This calculator exists to show that gap directly: what the payment becomes, and what happens to DSCR, if the rate actually reaches its ceiling during the hold. On a short-term bridge loan meant to be repaid or refinanced well before the rate could climb that far, the cap scenario may never matter in practice. On a longer hold, it's the realistic worst case to plan reserves against.
What this doesn't capture
- Periodic caps. Some floating structures also limit how much the rate can move at each adjustment period, separate from the lifetime cap modeled here. Check the actual note for both.
- The cost of a purchased rate cap. A separate hedging product — an interest rate cap purchased from a third party — has its own premium cost, which is different from the lender's built-in note-rate ceiling this tool models.
- Where the index is actually headed. This tool takes today's index as given and shows a range; it has no forecast of future rates.
- Refinance or exit timing. If the plan is to refinance into a fixed-rate DSCR loan before the floating period matters, the cap scenario may be closer to a theoretical ceiling than a real risk — that depends on how reliable the exit plan is.
For the underlying loan structure this typically applies to, see the hard money loan glossary entry.