You are applying for a mortgage loan to finance the acquisit…
You are applying for a mortgage loan to finance the acquisition of an existing office building. NOI in the first year of operations is expected to be $1,000,000. You acquisition capitalization rate is 6.00%. A lender is offering a fixed rate, permanent balloon mortgage with a 10-year term. The annual contract interest rate is 4.00% and the amortization period used for the calculation of monthly payments is 30 years. This lender requires a minimum debt coverage ratio (DCR) of 1.25. What is the largest mortgage the borrower can obtain that does not violate the required minimum DCR?