Commercial Mortgage Calculator
Commercial loans amortize over a long schedule but balloon in a shorter term. See the monthly payment and the lump sum due at the balloon date.
How the commercial mortgage calculator works
Commercial real-estate loans usually amortize over a long schedule, often twenty to twenty-five years, but mature in a much shorter term, commonly five to ten. The calculator prices the monthly payment as though the loan ran the full amortization, then stops at the maturity date to reveal the balloon balance still owed.
That balloon is the figure that defines a commercial loan: a large lump sum due when the term ends, typically refinanced or repaid from a sale. The tool also totals the interest paid up to that point, so you see the real cost before the balloon arrives.
Worked example: with loan amount of $900,000, interest rate of 7.50% and amortization (years) of 25, the commercial mortgage calculator shows monthly payment of $6,650.92.
- Monthly payment
- $6,650.92
- Balloon due
- $717,458
- Principal paid by then
- $182,542
- Interest to balloon
- $615,568
| Loan amount | Monthly payment |
|---|---|
| $500,000 | $3,694.96 |
| $1,000,000 | $7,389.91 |
| $2,000,000 | $14,779.82 |
| $5,000,000 | $36,949.56 |
The formula
The payment uses the standard amortization formula, Payment = P × r ÷ (1 − (1 + r)^−n), over the long amortization period. The balloon balance at maturity equals P(1 + r)^n − Payment × ((1 + r)^n − 1) ÷ r, where n is the number of payments made before the term ends.
- The rate is fixed through maturity; many commercial loans actually carry adjustable or step-up rates that change the balloon.
- Underwriting is simplified, ignoring debt-service-coverage ratio and net operating income that real lenders weigh heavily.
- The balloon is assumed repaid by refinancing or sale at maturity, an outcome dependent on future rates and property value.
- Origination fees, prepayment penalties, and reserve requirements common to commercial deals are not included here.
- Property taxes, insurance, and operating expenses are excluded, so the payment reflects principal and interest only.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender or a licensed advisor.
Questions about the commercial mortgage calculator
Why does a commercial loan amortize over longer than its actual term?
The long amortization keeps the monthly payment affordable, while the shorter term lets the lender reprice or exit before committing decades to one borrower. You get a manageable payment; they limit long-term rate risk.
The trade-off lands on you as the balloon, a large balance due at maturity that must be refinanced or paid from a sale.
What is DSCR and why do commercial lenders care about it?
Debt-service-coverage ratio divides a property's net operating income by its annual loan payments. A ratio above one means the building earns enough to cover its own debt, with surplus as the cushion lenders want. Most require roughly 1.2 or higher.
This calculator sizes the payment but does not test DSCR, so verify the property's income supports it.
What happens if I cannot refinance the balloon at maturity?
The full balloon comes due, and without a refinance or sale you face default. Lenders sometimes grant an extension or renewal, but on their terms and often at a higher rate.
Falling property values or tighter credit can leave a balloon unrefinanceable, which is why borrowers plan the exit early rather than assuming refinancing will simply be available.
Is the Commercial Mortgage Calculator free to use?
Yes. Every calculator on MortgageLoansCalculator is completely free, with no sign-up, login or paywall. Run as many scenarios as you like.
How is a commercial mortgage different from a residential one?
Commercial mortgages fund income property and typically carry shorter terms, higher rates, larger down payments (often 20–35%) and frequently a balloon payment, with approval based on the property’s income rather than just personal credit.
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