Calculate the annual yield you'll earn on a note purchase — or find the exact price to pay to hit your target return.
Fill in the note details above and click Calculate to see your yield.
This tool is built for mortgage note investors who need to quickly calculate the yield they'll earn on a note — or back-calculate the maximum price to pay to hit a specific return target. Toggle between the two modes above the form: "What Yield Will I Get?" if you already know a purchase price and want to check the return, or "What Should I Pay?" if you know your target return and want to find the ceiling on your offer.
Yield is your annual return expressed as a percentage of what you paid. If you pay $65,000 for a note and it earns the equivalent of $7,800 per year, your yield is 12%. Yield is everything in note investing — it's how you compare deals and decide what to offer. Unlike a savings account or a bond, a note's yield depends on four moving pieces at once: the price you pay, the monthly payment you receive, how many months are left on the term, and whether there's a balloon payment waiting at the end. This calculator runs all four through the same math a professional note buyer uses (an internal rate of return calculation) so you don't have to build a spreadsheet from scratch.
UPB stands for Unpaid Principal Balance — the remaining balance the borrower still owes. The difference between what you pay and the UPB is your discount. Buying at a discount is your margin of safety: if the borrower stops paying and you have to foreclose, you paid less than what they owe. UPB is not the same as the original loan amount — it's whatever balance is left today, which is why you always want a current payoff statement or servicing history before you finalize a purchase, not just the numbers a seller tells you over the phone.
Where your target should land depends on the note's risk profile: property type and condition, borrower payment history, lien position, and how much equity cushion exists between the UPB and the property's actual value. A first-lien note on a well-maintained single-family home with a borrower who's paid on time for five years justifies a lower yield target than a second-lien note behind a large first mortgage with spotty payment history.
This tells you how much of the UPB you're paying. If you buy at 81 cents on the dollar, you paid $0.81 for every $1.00 the borrower owes. The lower the cents on the dollar, the bigger your discount and the more cushion you have. Note brokers and sellers often quote deals in cents on the dollar because it's a fast way to compare offers across notes of very different sizes — a $40,000 note bought at 70 cents and a $400,000 note bought at 70 cents carry the same relative discount even though the dollar amounts are worlds apart.
A high yield can look great on this calculator and still be a bad deal if the underlying collateral is weak. Before you rely on a yield number to make an offer, pair it with a loan-to-value check (see the LTV Safety Checker below) and a real due diligence review of the borrower's payment history, the property's condition, and the lien position. Yield tells you what you'll earn if everything goes as planned — LTV and due diligence tell you how much room you have if it doesn't.
I run every note I look at through this exact calculator before I let myself get excited about it. Early on, I made the mistake plenty of new note buyers make: I anchored on the monthly payment and the seller's asking price without actually solving for yield first. On paper the deal "felt" fine. Once I ran the real numbers, the yield was closer to 7% — not the 12%+ I actually target for a performing note. I would have overpaid without ever realizing it.
The habit I'd pass on to anyone starting out: always solve for yield before you fall in love with a deal, and always double-check the UPB against a real payoff statement, not a number the seller texts you. The math doesn't lie, but it only protects you if the inputs going into it are accurate.