Commercial mortgage calculator
A commercial mortgage payment is calculated from the loan amount, interest rate, and amortization schedule — not the loan term. Because most commercial loans mature (5–10 years) long before a 25–30 year amortization schedule finishes, a balloon payment is typically due at maturity. Enter your terms below to see the payment, balloon balance, and total interest.
Amortization vs. term — why the balloon exists
Amortization determines the size of the monthly payment; term determines how long the borrower actually has the money before it's due back. When amortization is longer than the term, the loan isn't fully paid off at maturity — the remaining balance is the balloon payment.
| Structure | Typical use |
|---|---|
| 30-yr am / 10-yr term | Stabilized permanent financing, refinance |
| 25-yr am / 5-yr term | Bank balance-sheet loans, tighter rate resets |
| Interest-only / 1–3-yr term | Bridge loans during lease-up or renovation |
Commercial mortgages also differ from residential in key ways: lower typical LTV limits (65–75% vs. up to 97%), income-based underwriting via DSCR rather than personal debt-to-income alone, and pricing tied to Treasury or SOFR spreads instead of standardized conforming rates.
The figure above is debt service only. New York's mortgage recording tax and Florida's documentary stamp and intangible taxes are charged on the loan amount rather than the price, and are due in cash at closing — budget them separately. The closing cost calculator estimates both, and the New York recording tax guide and Florida doc stamps guide explain how each is assessed.
Frequently asked questions
How is a commercial mortgage payment calculated?
Commercial mortgage payments use the standard amortization formula: monthly payment equals the loan amount times the monthly interest rate, divided by one minus (1 + monthly rate) raised to the negative number of payments. A $4.85M loan at 6.85% over a 30-year amortization runs about $31,780 per month.
What is a balloon payment on a commercial loan?
Most commercial loans amortize on a 25–30 year schedule but come due much sooner — often 5, 7, or 10 years — because lenders don't want 30-year rate risk. The remaining principal balance at maturity, called the balloon payment, must be paid off, refinanced, or extended.
How does an interest-only period affect my payment?
During an interest-only (IO) period, payments cover only accrued interest and the loan balance doesn't decrease. This lowers the payment temporarily but means more principal remains once amortizing payments begin, resulting in a larger balloon balance and more total interest over the term.
What's the difference between amortization and loan term?
Amortization is the schedule used to calculate the payment size — e.g., a 30-year schedule. Loan term is how long until the loan actually matures and must be repaid or refinanced — e.g., 10 years. A loan with a 30-year amortization and 10-year term is far from paid off at maturity, hence the balloon payment.
How is a commercial mortgage different from a residential mortgage?
Commercial loans typically carry shorter terms (5–10 years) with balloon payments rather than residential's common 30-year fully amortizing structure, higher rates, lower maximum LTV (65–75% vs. up to 97% residential), and underwriting based on property income (DSCR) rather than personal income alone.
Does this calculator include New York City's mortgage recording tax?
No — it estimates debt service only. New York City's combined recording tax on commercial mortgages of $500,000 or more is 2.8% of the loan under NY Tax Law §253, payable in cash at closing; counties outside the city generally run 1% to 1.3%, and Florida charges roughly 0.55% instead.
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