HP 12C and HP 11C: Loan Amount Using the Annual Loan Constant

HP 12C and HP 11C:  Loan Amount Using the Annual Loan Constant

Introduction

The program calculates the theoretical loan amount using the following factors:

*  NOI:  Net Operating Income. The estimated net operating income the property is expected to earn annually.  An average is usually used.

*  DCR:  Debt Coverage Ratio.  The ratio of net operating income to annual debt service, describing a company's ability to pay its debts.  Generally, the larger the DCR, the better.  We really don't want DCR to be below 1.

*  Number of payments per year, number of years, and annual interest rate of the potential loan. 

The ALC, or the annual loan constant is calculated by:

*  Either divided the annual debt service by the loan amount (when the amount is known), or

*  Determining the periodic payment to amortize a $100 loan given number of payments and interest rate.

Set up:
Number of payments -> N
Interest Rate -> I%YR  (or periodic interest rate -> i)
-100 -> PV
0 -> FV
Solve for PMT

The ALC is expressed as a percentage. 

The theoretical loan amount is calculated by:

Loan = NOI / (DCR * ALC%)

HP 12C Program: Loan Amount Using the Annual Loan Constant

Instructions:
Store the following:
NOI in R1
DCR in R2
Number of payments per year in R3
Number of periods in [ n ]
Periodic Interest rate in [ i ]

Program:
Step;  Key;  Code
01;  1;  1
02;  0;  0
03;  0;  0
04;  CHS;  16
05;  PV;  13
06;  0;  0
07;  FV;  15
08;  PMT;  14
09;  RCL 3;  45, 3
10;  *;  20
11;  RCL 2; 45, 2
12;  x<>y;  34
13;  %;  25
14;  RCL 1; 45, 1
15;  x<>y;  34
16;  ÷;  10
17;  GTO 00;  43, 33, 00

(* HP 12C Platinum, step 17:  GTO  000; 43, 33, 000)

HP 11C Program:    Loan Amount Using the Annual Loan Constant

Instructions:
Store the following:
NOI in R1
DCR in R2
Number of payments per year in R3
Number of periods in R4
Periodic Interest rate in R5

Program:
Step; Key; Code
001;  LBL A; 42, 21, 11
002;  1;  1
003;  ENTER; 36
004;  ENTER; 36
005;  RCL 5;  45, 5
006; %;  43, 14
007;  +;  40
008;  RCL 4;  45, 4
009;  CHS;  16
010;  y^x; 14
011;  *;  30
012;  1;  1
013;  RCL 5; 45, 5
014;  %;  43, 14
015;  x<>y;  34
016;  R↓;  33
017;  ÷;  10
018;  1;  1
019;  0;  0
020;  0;  0
021;  x<>y; 34
022;  ÷;  10
023;  RCL 3; 45, 3
024;  *;  20
025;  RCL 2; 45, 2
026;  x<>y; 34
027;  %;  43, 14
028;  RCL 1; 45, 1
029;  x<>y;  34
030;  ÷; 10
031;  RTN; 43, 32

Examples

Example 1: 

NOI:  $58,000.00
DCR:  1.25
P/Y:  12
Number of Years: 30
Annual Interest Rate:  5%

Loan Amount:  $720,288.92

Example 2:

NOI:  $40,000.00
DCR:  1.35
P/Y:  12
Number of Years: 20
Annual Interest Rate:  6.8%

Loan Amount: $323,464.95

Source: 

Goldman, Mark H. and Stephen D. Messner "HP 12C Real Estate Applications Handbook"  Hewlett Packard Rev. B. March 1984

Eddie

All original content copyright, © 2011-2019.  Edward Shore.   Unauthorized use and/or unauthorized distribution for commercial purposes without express and written permission from the author is strictly prohibited.  This blog entry may be distributed for noncommercial purposes, provided that full credit is given to the author.

HP 20S and HP 21S: Qualifying Loan Amount (28:36 ratio)

HP 20S and HP 21S:  Qualifying Loan Amount (28:36 ratio)

Introduction

The program presented in today's blog entry will calculate the qualifying loan amount given the following:

*  Loan's annual interest rate and term (in years)
*  The borrower's monthly gross income
*  The borrower's monthly non-property related debt (credit cards, auto loans, store bought appliances on credit, etc).  Do not include utilities or phone bills.
*  The estimated monthly property tax and insurance.  For this program, combine the two amounts.

Before running the program, store the following amounts in the following registers:

R0:  Monthly Income
R1:  Monthly Debt
R2:  Monthly Property Taxes and Insurance
R3:  Annual Interest Rate
R4:  Term

The down payment is not taken into consideration.

The result is the loan amount using the standard 28:36 ratio (stored in register R5).  The 28:36 ratio is the guideline that the borrower spends no more than 28% of their income on housing expenses, and no more than 36% of their income on all debt service.

HP 20S and HP 21S Program:  Qualifying Loan Amount

The key codes for most steps are the same.  Lines where the key codes are different are noted, particularly the percentage function.

STEP  KEY      KEY CODE
01    LBL E    61, 41, E
02    FIX 2    51, 33, 2
03    RCL 0    22, 0
04    ×        55
05    3        3
06    6        6
07    %        HP 20S: 51,14  HP 21S: 51, 53
08    =        74
09    -        65
10    RCL 1    22, 1
11    =        74
12    STO 6    21, 6
13    RCL 0    22, 0
14    ×        55
15    2        2
16    8        8
17    %        HP 20S: 51,14  HP 21S: 51, 53
18    =        74
19    STO 7    21, 7
20    RCL 6    22, 6
21    INPUT    31
22    RCL 7    22, 7
23    X≤Y?     61, 42
24    SWAP     51, 31
25    STO 8    21, 8
26    RCL 2    22, 2
27    STO - 8  21, 65, 8
28    1        1
29    -        65
30    (        33
31    1        1
32    +        75
33    RCL 3    22, 3
34    ÷        45
35    1        1
36    2        2
37    0        0
38    0        0
39    )        34
40    Y^X      14
41    (        33
42    1        1
43    2        2
44    +/-      32
45    ×        55
46    RCL 4    22, 4
47    )        34
48    =        74
49    ÷        45
50    (        33
51    RCL 3    22, 3
52    ÷        45
53    1        1
54    2        2
55    0        0
56    0        0
57    )        34
58    =        74
59    ×        55
60    RCL 8    22, 8
61    =        74
62    STO 5    21, 5
63    RTN      61, 26

Example

R0:  Monthly Income = $4,485.00
R1:  Monthly Debt = $375.00
R2:  Monthly Property Taxes and Insurance = $126.83
R3:  Annual Interest Rate = 5%
R4:  Term = 30 years

Result:  $207,288.60

Eddie

All original content copyright, © 2011-2018.  Edward Shore.   Unauthorized use and/or unauthorized distribution for commercial purposes without express and written permission from the author is strictly prohibited.  This blog entry may be distributed for noncommercial purposes, provided that full credit is given to the author.  Please contact the author if you have questions.