What is 365/30 amortization in real estate?

What is 365/30 Amortization in Real Estate?

The term "365/30 amortization" in real estate finance refers to a specific method of calculating monthly loan payments where interest is calculated based on a 365-day year, but payments are assumed to be made in equal monthly installments as if each month had 30 days. This approach simplifies the calculation of interest over the life of the loan, providing a uniform payment schedule. It is commonly used in some commercial real estate loans, offering a balance between the precision of daily interest calculations and the simplicity of a standard monthly payment structure.