Commercial Mortgage Calculator
Commercial loans play by different rules: shorter terms, longer amortizations, and a balloon payment at the end. This commercial mortgage calculator computes your monthly payment, the balloon balance due at maturity, the mortgage constant, the true effective rate with points, and the DSCR lenders actually underwrite to.
Fixed-rate, monthly-payment model. Most commercial loans use 365/360 day-count and may carry prepayment or defeasance terms this model does not capture. Not financial advice.
Quick Answer
A $1,000,000 loan at 6.5% with 25-year amortization and a 10-year term costs $6,751.50/month ($81,018/year). At maturity a $774,629 balloon (77.5% of the loan) comes due. With $110,000 of annual NOI the DSCR is 1.36x, clearing the typical 1.25x lender bar.
How commercial loans differ from residential
Commercial mortgage
- Term 5–10 years, amortization 25–30
- Balloon payment at maturity (often 50–80% of loan)
- Underwritten on property cash flow (DSCR)
- Max LTV usually 75%
- Prepayment / defeasance penalties common
Residential mortgage
- Term equals amortization (15 or 30 years)
- Fully amortizing: zero balance at the end
- Underwritten on borrower income (DTI)
- LTV to 97% with PMI
- Rarely any prepayment penalty
The balloon is the defining feature: the payment is sized as if you had 25 years, but the lender wants its money back in 10. After 120 payments of $6,751.50 on the worked example, $774,629 is still outstanding and due in full, usually refinanced. Borrowers who do not plan the exit, refinance, sale, or cash, get trapped. [1]
The balloon math, step by step
Monthly payment uses the amortization schedule: P = L × r(1+r)N ÷ ((1+r)N − 1) with r = 0.065/12 and N = 300, giving $6,751.50. The balance after 120 payments is L(1+r)120 − P[((1+r)120 − 1) ÷ r] = 1,000,000 × 1.9141 − 6,751.50 × 168.77 = $774,629. The mortgage constant, annual debt service divided by loan amount, is 8.10%: the quickest way to compare loans is asking “how many cents of annual payment does each dollar borrowed cost?” With 1 point of origination fee, the true effective rate (IRR on net proceeds) is 6.646%, not the quoted 6.5%. [2]
DSCR: the number that approves or kills the loan
Debt Service Coverage Ratio = net operating income ÷ annual debt service. The worked example: $110,000 ÷ $81,018 = 1.36x, meaning the property earns 36% more than its mortgage costs. Most lenders require 1.25x to 1.35x; below 1.0x the property cannot pay for itself. Note this tool’s DSCR uses P&I only: some lenders include taxes, insurance, and reserves in debt service, which lowers the ratio. The cap rate calculator covers the income side of the same underwriting, and construction mortgage models the build phase. [1]
2026 commercial rates by property type
| Property type | Typical fixed rate | Notes |
|---|---|---|
| Multifamily | 5.79% | Strongest demand, best pricing |
| Industrial | 5.87% | Still favored by lenders |
| Self storage | 5.97% | Resilient occupancy |
| Retail | 6.01% | Grocery-anchored preferred |
| Office | 6.45% | Weakest sector, widest spreads |
| Hospitality | 6.70% | Highest risk premium |
Indicative 2026 fixed-rate ranges compiled from commercial rate surveys [3]. Actual quotes vary by LTV, DSCR, sponsor strength, and market.
What competing calculators miss
The two serious rivals both compute payments and balloons, but each leaves a hole. One shows no effective rate with points, so a 6.5% quote with 2 points looks identical to a 6.5% quote with none, when the true costs differ by tens of thousands. The other buries DSCR in a separate tool, forcing users to hand-carry the payment across. Neither explains the mortgage constant, the one number that lets you compare two loan structures at a glance. This calculator keeps payment, balloon, constant, effective rate, and DSCR on one screen. [2][3]
Frequently asked questions
The remaining loan balance due in full when the loan term ends. With a 10-year term on 25-year amortization, most of the principal is still outstanding at maturity: $774,629 on the $1M worked example. Borrowers typically refinance or sell before it comes due.
Usually 1.25x to 1.35x: the property’s net operating income must exceed annual debt service by 25–35%. Stronger sponsors and lower LTVs can flex this; weak cash flow cannot. Below 1.0x, the property does not cover its own mortgage. [1]
Annual debt service divided by the loan amount, here 8.10%. It answers: for each dollar borrowed, how many cents of yearly payment does it cost? Higher constants mean more expensive debt, and it is the fastest way to compare two loan structures. [2]
Origination points and fees are paid at closing but buy no interest reduction, so the true yield on the cash you actually receive is higher. One point on the worked example lifts the effective rate from 6.5% to 6.646%.
Sometimes: SBA 504 and some portfolio loans fully amortize over 20–25 years. Set the loan term equal to the amortization period in this calculator and the balloon drops to zero. Expect stricter underwriting for the privilege.
Typically up to 75% for most property types, higher for owner-occupied SBA deals. Above that, expect mezzanine debt or more equity. The duplex mortgage calculator covers small residential-income properties that straddle the line.
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References
- Commercial Real Estate Direct. Commercial mortgage rate and term survey data (2026 indicative ranges). cdcalculators.com (accessed Oct 17, 2026)
- Ryan O'Connell, CFA. Commercial mortgage calculator: payments, balloon and effective yield. ryanoconnellfinance.com (accessed Oct 17, 2026)
- U.S. Small Business Administration. 504 loans: fixed-rate financing for commercial real estate. www.sba.gov (accessed Oct 17, 2026)
- Federal Reserve. Senior Loan Officer Opinion Survey on bank lending practices (commercial real estate). www.federalreserve.gov (accessed Oct 17, 2026)
- Mortgage Bankers Association. Commercial real estate finance research. www.mba.org (accessed Oct 17, 2026)