Amortization
The gradual repayment of a loan through scheduled payments that cover both interest and principal. Early payments are mostly interest; the mix shifts toward principal as the balance falls. An amortization schedule shows how each payment splits and what remains owed at any point in the loan’s life.
Related terms
Cash Flow
The money left over after all of a property’s bills are paid from its income — operating expenses, loan payments, and reserves. Positive cash flow means the property pays for itself with margin; negative cash flow means the owner feeds it. Cash flow is the recurring return, distinct from appreciation and tax effects.
DSCR (Debt Service Coverage Ratio)
Net operating income divided by annual debt service. A DSCR of 1.25 means the property’s income is 125% of its loan payments; below 1.0, the property does not cover its own debt. Lenders use DSCR to size loans, and DSCR loan programs qualify borrowers on property income rather than personal income.