Amortization Schedule Generator

An amortization schedule breaks a loan down month by month, showing how each payment splits between principal and interest and how the balance pays down over time. This generator handles the standard commercial real estate cases: principal and interest payments, interest-only periods, and balloon balances at maturity. Use it to confirm lender quotes, model out cash flow, and understand exactly how a loan pays down.

What Is Amortization?

Amortization is the process of paying off a loan through regular installments of principal and interest. On a fully amortizing loan, every scheduled payment includes a piece of principal and a piece of interest, and by the end of the schedule the loan is paid in full. Early payments are mostly interest because the loan balance is high; late payments are mostly principal because the balance has shrunk.

The amortization schedule is the table that shows this month by month. It is the most common way to view how a loan plays out over time, and it is the basis for almost every other loan calculation: DSCR, total interest cost, balloon balance, payoff timing, and refinance economics.

Amortization vs. Loan Term

These two terms get used interchangeably in residential lending because most home loans amortize over the same period as their term (a 30-year mortgage runs 30 years, no balloon). In commercial real estate, the two are usually different:

A typical CMBS or bank deal might be a 10-year loan with 30-year amortization. The borrower makes payments based on the 30-year schedule but owes the full remaining balance at year 10. That balance is the balloon, and it is usually paid off through refinance or sale of the property. For a deeper dive on permanent loan structures, see Janover Pro's guide on permanent loans for stabilized properties.

Balloon Payments

The balloon is the unpaid principal balance at maturity. It is calculated by running the amortization forward from closing to the maturity date. Whatever principal remains is the balloon.

For a $5 million loan at 6.5 percent with 25-year amortization and a 10-year term, the balloon at year 10 is approximately $3.69 million. The borrower has paid down $1.31 million in principal over 10 years and owes the remaining $3.69 million on the maturity date. The lender expects refinance, sale, or a negotiated extension to retire the debt.

Interest-Only Periods

An interest-only (IO) period is a stretch at the beginning of the loan during which the borrower pays only interest, no principal. The loan balance does not decrease during IO. After the IO period ends, the loan begins amortizing on the remaining term.

Why borrowers want IO:

• Higher early cash flow. Without principal payments, monthly debt service is lower, which boosts cash-on-cash return in the early years.
• Better DSCR for lender approval. A lower monthly payment improves DSCR, which can unlock larger loan proceeds.
• Value-add deals. When the property is being repositioned, IO matches debt service to lower in-place income.
• Construction and bridge loans. IO is the default during construction and stabilization because there is no stable income yet.

Why borrowers regret IO later: when the IO period ends, monthly payments step up. If income has not grown to absorb the increase, DSCR can drop sharply. IO is a powerful tool, but it is borrowed cash flow that has to be repaid eventually.

How Amortization Affects Total Loan Cost

The amortization period is the single biggest driver of total interest paid over the life of a loan. Same loan amount, same interest rate, different amortization, very different total cost.

The 30-year amortization saves about $2,160 per month compared to the 20-year, but the borrower pays roughly $2.4 million more in total interest if both loans run to full payoff. In commercial real estate, this comparison is more theoretical than practical because the loan rarely runs to full payoff. The borrower is much more concerned with monthly cash flow during the loan term than with total interest over 30 years.

Reading an Amortization Schedule

An amortization schedule has five key columns:

• Month: The payment number, from 1 through the end of the loan.
• Payment: Total monthly payment (principal plus interest).
• Principal: Portion of that payment that reduces the loan balance.
• Interest: Portion of that payment that goes to the lender as interest.
• Balance: Remaining loan balance after the payment.

Watch how the principal/interest split shifts over the schedule. In month 1 of a $5 million loan at 6.5 percent with 25-year amortization, about $27,083 of the $33,760 payment is interest and only $6,677 is principal. By month 200 (year 17), the same $33,760 payment is roughly $13,000 interest and $20,760 principal. The longer the loan runs, the faster principal pays down.

Amortization in Deal Analysis

For brokers, the amortization schedule is the underlying calculation for several other metrics:

• DSCR: Annual debt service comes from the schedule, then divided into NOI.
• Loan constant: Annual debt service divided by loan amount.
• Refinance proceeds: Balloon balance at maturity is the amount that needs to be refinanced.
• Equity build-up: Cumulative principal paid is equity gained through amortization.
• Yield maintenance / defeasance cost: Both depend on remaining principal balance, which comes from the schedule.

For a deeper dive into how amortization fits into the broader picture of commercial loan structures and cash flow modeling, the commercial mortgage calculator handles full loan analysis. The amortization glossary entry covers definitions and formulas.

Frequently Asked Questions