Interest Rate Cap Calculator
Price an interest rate cap on SOFR with Black or Bachelier caplet pricing, level or amortizing notionals, and a strike comparison table.
Floating-rate apartment debt, especially bridge loans, usually requires an interest rate cap. If the floating index sets above the strike, the cap provider pays the difference, putting a ceiling on debt service. Lenders size the required strike so the deal still covers at the cap, and the upfront premium is a real closing cost worth estimating early.
This tool prices a SOFR cap as a strip of caplets on a forward curve you can edit. The Black model quotes volatility in percent; the Bachelier model quotes it in basis points and handles very low or negative rates. The strike table shows how the premium moves as you buy the strike up or down, which is the trade-off behind every cap quote.
Cap premium estimate
SOFR forward curve (%)
Estimates only; dealer quotes and loan documents control. Strike comparison and per-caplet detail below.
| Strike | Premium | bp of notional |
|---|
| Caplet | Expiry | Forward | Notional | Value |
|---|
How caps are priced.
A cap is a strip of caplets, one per reset period. Each caplet is an option on the forward rate for its period, priced here with the Black or Bachelier formula on simply compounded Actual/360 forwards derived from the curve you enter. Amortizing notionals follow a standard mortgage amortization schedule built from the note rate and amortization term, so the hedge tracks the loan balance.
Real dealer quotes use a volatility term structure with skew rather than a single flat number, and include credit and execution spread. Required cap terms, including strike, term, and notional schedule, come from the loan agreement. Use this to frame a budget and sanity-check quotes, then confirm with a live desk. Related tools: the defeasance calculator and yield maintenance calculator for fixed-rate exits.