About the Commercial Real Estate Loan Calculator
Commercial mortgages rarely work like home loans. A typical commercial real estate (CRE) loan is amortized over 20 to 30 years so the payment stays manageable, but it matures after a much shorter term, often 5, 7 or 10 years, when the remaining balance is due as a balloon payment. This calculator handles that split: enter the property value, loan-to-value (LTV), rate, amortization period, loan term and any interest-only period, and it returns the monthly payment, the balloon due at maturity and the interest you pay along the way.
It also runs the two underwriting tests lenders apply first. Enter the property’s net operating income (NOI) to see the debt service coverage ratio (DSCR, NOI ÷ annual debt service) and the debt yield (NOI ÷ loan amount). Many lenders look for a DSCR of roughly 1.20–1.35 and a debt yield around 8–10% or more, though requirements vary by lender, property type and market.
Use it to size a purchase or refinance of an office, retail, industrial, multifamily or mixed-use property, compare amortization choices, or plan for the balloon refinance. Origination fees are shown separately and the rate is treated as fixed for the whole term.
With the default inputs, the monthly payment (amortizing) is $9,672.76. Change any value above to recalculate instantly.
How to use the commercial real estate loan calculator
- 1Enter the property value and the loan-to-value the lender offers.
- 2Enter the interest rate and choose the amortization period.
- 3Enter the loan term — the year the balloon is due — and any interest-only years.
- 4Add the property’s yearly net operating income to check DSCR and debt yield.
- 5Review the payment, balloon balance and yearly schedule to plan your refinance.
Formula and method
The loan amount L is the property value times the LTV. The monthly payment M is the standard level payment that would retire L over the full amortization period N (years × 12) at monthly rate r. Because the loan matures earlier, after k amortizing payments the remaining balance — the balloon — is the future value of the loan minus the future value of the payments made.
If you choose an interest-only period, payments during it are L × r and amortization starts afterwards over the full amortization period, so k equals the term minus the interest-only months. DSCR divides yearly NOI by twelve amortizing payments; lenders size loans so DSCR stays above their minimum. Debt yield (NOI ÷ loan) ignores rate and amortization, which is why lenders use it as a second check. The origination fee is a percentage of the loan paid at closing.
- L
- Loan amount (value × LTV)
- r
- Monthly interest rate (annual rate ÷ 12)
- N
- Amortization period in months
- k
- Amortizing payments made before maturity
- NOI
- Net operating income per year
Worked examples
$2M property, 70% LTV, 6.75%, 25-year amortization, 10-year term
A $1.4 million loan at 6.75% amortized over 25 years costs $9,672.76 a month, or $116,073 a year. With $160,000 of NOI the DSCR is 1.38 and the debt yield 11.43%. After 10 years about $1,093,079 is still owed as a balloon, having paid roughly $853,811 in interest.
Same loan with 2 years interest-only
Interest-only payments are $1.4M × 6.75% ÷ 12 = $7,875 for 24 months. Amortization then runs for the remaining 8 years of the term, so less principal is repaid and the balloon rises to about $1,171,992.
Smaller deal: $900k at 75% LTV, 7.25%, 20-year amortization, 5-year term
Borrowing $675,000 at 7.25% over a 20-year amortization gives a $5,335.04 monthly payment, or about $64,020 a year. NOI of $75,000 produces a DSCR of only 1.17, so many lenders would cut the loan size. The five-year balloon is about $584,429.
Frequently asked questions
What is the difference between loan term and amortization?+
Amortization is the period used to calculate the payment, often 20–30 years. The term is when the loan actually matures, often 5–10 years. When the term is shorter than the amortization, the unpaid balance is due as a balloon at maturity.
What DSCR do commercial lenders require?+
Many banks and agency lenders look for a debt service coverage ratio of at least about 1.20 to 1.35, meaning NOI covers the mortgage payments 1.2–1.35 times. Riskier property types such as hotels usually need higher coverage.
What LTV can I get on a commercial property?+
Commercial loans commonly top out around 65% to 80% LTV depending on property type, lender and borrower strength. SBA 504 and 7(a) loans for owner-occupied properties can go higher, with down payments as low as 10%.
What is debt yield?+
Debt yield is NOI divided by the loan amount. Unlike DSCR it does not depend on the interest rate or amortization, so lenders use it to cap loan size; a minimum of roughly 8–10% is common, but it varies by lender and market.
How do I deal with a balloon payment?+
Most borrowers refinance or sell before maturity. Plan early: if rates rise or the property’s value falls, the new loan may be smaller than the balloon, requiring extra equity. Prepayment penalties, yield maintenance or defeasance can apply if you pay off early.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.