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.
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.
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