Commercial Mortgage Calculator
Calculate monthly payments, total interest, and balloon balance for commercial real estate loans.
A commercial mortgage payment depends on three things: the loan amount, the interest rate, and the amortization period. This calculator handles both principal-and-interest (P&I) and interest-only (IO) loans, shows the balloon balance at the end of your loan term, and generates a full amortization schedule so you can see exactly how each payment breaks down over time.
Commercial Mortgage Payment Calculator
How Commercial Mortgage Payments Work
Commercial mortgage payments are calculated using the same amortization formula as residential loans, but the structure is different. Most commercial loans have a loan term that is shorter than the amortization period, which creates a balloon payment at maturity.
Where L = loan amount, r = monthly rate (annual / 12), n = total months (amortization years × 12)
For example, a $1,000,000 loan at 6.5% with 25-year amortization produces a monthly P&I payment of approximately $6,752. If the loan term is 10 years, you make 120 of those payments, then owe the remaining balance (the balloon) at maturity.
The loan term and amortization period are not the same thing. Amortization determines your monthly payment amount. The term determines when the remaining balance comes due. A 10-year term with 25-year amortization means lower monthly payments than a fully amortizing 10-year loan, but a significant balloon payment at the end.
Interest-Only vs. Principal & Interest
Interest-only (IO) payments cover only the interest each month, with no principal paydown. The calculation is straightforward:
A $1,000,000 loan at 6.5% interest-only costs $5,417 per month, compared to $6,752 for P&I with 25-year amortization. That is roughly 20% lower, but no principal gets paid down during the IO period.
IO periods are common on bridge loans, construction loans, and the first one to three years of some permanent loans. They improve near-term cash flow but mean the full loan balance remains at maturity. If the property is in a value-add or lease-up phase, IO can make sense. For stabilized assets, most lenders and borrowers prefer P&I to build equity over time.
Understanding the Balloon Payment
Most commercial mortgages mature before the loan is fully amortized. When that happens, the remaining balance is due in full as a balloon payment. The borrower typically refinances into a new loan at that point.
| Loan Amount | Rate | Amortization | Term | Monthly Payment | Balloon Balance |
|---|---|---|---|---|---|
| $1,000,000 | 6.5% | 25 years | 5 years | $6,752 | ~$917,000 |
| $1,000,000 | 6.5% | 25 years | 10 years | $6,752 | ~$803,000 |
| $5,000,000 | 6.5% | 25 years | 10 years | $33,760 | ~$4,016,000 |
The balloon balance is an important consideration for refinancing risk. If property values decline or interest rates rise significantly before the term expires, refinancing may be more expensive or difficult. Factor this into your deal analysis.
What Affects Your Commercial Mortgage Payment
Four variables drive the monthly payment, and understanding each one helps you structure deals and set borrower expectations.
Loan Amount
Commercial mortgage amounts are constrained by loan-to-value (LTV) ratios and debt service coverage ratio (DSCR) requirements. Most lenders cap LTV at 65% to 80% depending on the loan type and property. The actual loan amount is typically the lower of what LTV and DSCR constraints allow.
Interest Rate
Rates vary by loan type, property type, leverage, and market conditions. A 50 basis point rate difference on a $5 million loan changes the monthly payment by roughly $1,300 to $1,500. Always compare offers from multiple lenders to ensure competitive pricing.
Amortization Period
Longer amortization means lower monthly payments but more total interest paid. Most commercial mortgages amortize over 25 or 30 years. SBA 504 loans offer up to 25-year amortization on the CDC portion. Some bridge and construction loans are interest-only with no amortization at all.
Loan Term
The term determines when the loan matures. Shorter terms (5 to 7 years) mean less interest paid but more frequent refinancing events. Longer terms (10 to 25 years) provide payment stability but may carry slightly higher rates. HUD/FHA multifamily loans offer fully amortizing terms up to 35 years with no balloon.
Commercial Mortgage Payment by Loan Type
Different loan programs offer different term and amortization structures. Here is how they compare for a $5 million loan.
| Loan Type | Typical Rate Range | Typical Amortization | Typical Term |
|---|---|---|---|
| Bank / Credit Union | 6.0% – 8.0% | 20 – 25 years | 5 – 10 years |
| CMBS | 6.0% – 8.5% | 25 – 30 years | 5, 7, or 10 years |
| SBA 504 | 5.5% – 7.0% (CDC) | 10, 20, or 25 years | Matches amortization |
| Fannie Mae / Freddie Mac | 5.5% – 7.5% | 25 – 30 years | 5, 7, 10, or 12 years |
| HUD/FHA | 5.0% – 6.5% | 35 years (fully amortizing) | 35 years |
| Bridge | 8.0% – 12.0% | Interest-only | 1 – 3 years |
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This content is for informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. Janover Pro is a technology platform that connects commercial mortgage brokers with lenders. Janover Pro is not a lender and does not make lending decisions. Loan terms, rates, eligibility, and availability are determined by individual lenders and are subject to change without notice. Consult qualified financial and legal professionals before making financing decisions.
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