30/360An interest rate accrual method that assumes all 12 months of a calendar year have 30 days, using a 360-day year. Under this method, borrowers pay 5 days less interest than under Actual/360.Acceleration ClauseThe section of a mortgage stating that if the borrower sells the property or places a second mortgage or mezzanine loan on it, the lender can immediately demand the loan be paid in full.ACHAutomated Clearing House — refers to auto-pay for a commercial mortgage's loan servicing.Actual/360An interest accrual method that charges interest for all 365 calendar days using a 360-day year, meaning borrowers pay 5 days more interest than under 30/360.Actual/365An interest accrual method where annual interest is divided by a 365-day year, and interest for each period reflects the actual number of days in that period.Amortization PeriodThe length of time mortgage payments are spread to calculate the monthly payment — not to be confused with the loan term, which can be shorter and end in a balloon payment.APR (Annual Percentage Rate)The effective interest rate a loan would carry if you accounted for costs associated with securing it, such as closing costs and points — a more reliable way to compare mortgage options.AssumabilityA loan feature allowing another buyer to take over the existing loan's terms and responsibility from the original borrower, typically for a 1.00% fee and lender approval.Balloon PaymentThe remaining loan balance due in a lump sum at the end of the loan term, when the amortization period extends beyond the term itself.Cap Rate (Capitalization Rate)A property's Net Operating Income divided by its value or purchase price, used to estimate an investor's potential return independent of financing.Debt Service Coverage Ratio (DSCR)A property's Net Operating Income divided by its annual debt service (principal and interest payments) — the primary ratio lenders use to determine how much they can lend.Debt YieldA property's Net Operating Income divided by the loan amount, used by some lenders as an additional cash flow safeguard independent of amortization or rate assumptions.DefeasanceA prepayment structure, common with CMBS loans, where the borrower replaces the loan's collateral with a portfolio of securities that replicate the lender's expected cash flow, rather than paying a cash penalty.Impound AccountA reserve account maintained by the lender to collect and pay recurring obligations like property taxes and hazard insurance on the borrower's behalf.Loan-to-Cost (LTC)The loan amount divided by the total cost of a project, including acquisition and any capital improvements — typically capped around 85% for new construction or major renovation.Loan-to-Value (LTV)The loan amount divided by the appraised value of the property — the inverse of the equity or down payment percentage.Net Operating Income (NOI)A property's income after operating expenses, before debt service and capital expenditures — the figure lenders use to underwrite cash-flow-based loans.Non-RecourseA loan structure where the lender's only remedy upon default is the property itself, without a personal guarantee from the borrower (aside from standard “bad boy” carve-outs for fraud).Prepayment PenaltyA fee charged if a loan is paid off before its maturity date, structured in various ways including yield maintenance, stepdown, or defeasance.Rate LockA lender's commitment to hold a specific interest rate for a defined period (commonly 60-90 days) while the loan moves through underwriting.RecourseA loan structure requiring the borrower to personally guarantee repayment, giving the lender recourse to the borrower's other assets beyond the property itself in the event of default.Single-Asset EntityA legal ownership entity, typically an LLC, formed to own a single commercial property and nothing else, commonly required by non-recourse lenders to simplify foreclosure.Stepdown PrepaymentA declining prepayment penalty structure, such as 5-4-3-2-1%, that reduces each year the loan is outstanding.Yield MaintenanceA prepayment penalty calculated to make the lender financially whole for the interest income lost if a loan is paid off early, based on the difference between the loan's rate and current market rates. 