Commercial Mortgage Calculator

Commercial loans play by different rules from home loans: 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, all on one screen.

Quick Answer

How to use the commercial mortgage calculator

Enter the loan, not the property price, then the two time periods that define a commercial loan. The results stay hidden until you click Calculate.

1. Enter the loan amount: $1,000,000 is pre-filled. If you know the price and the down payment, subtract the down payment first; this tool does not ask for a price, so it cannot compute LTV for you.
2. Enter the annual rate: a fixed rate for the whole term, 6.5% in the example. A 0% rate now works: the payment becomes the loan divided by the amortization months, and the balloon is the unpaid remainder.
3. Enter the amortization period: 25 years in the example. This sizes the payment only; it is not when the loan ends.
4. Enter the loan term: 10 years in the example. This is when the balloon comes due, and it must not exceed the amortization period, or the tool shows the message “Loan term cannot exceed the amortization period.”
5. Enter annual NOI if you want a DSCR verdict: $110,000 in the example. Leave it blank and the tool still gives payment, balloon, constant, and effective rate, with the verdict reading “Enter NOI for a DSCR verdict”. A negative NOI is treated the same as blank.
6. Enter origination points: 1% in the example. Points change only the effective rate, never the monthly payment. With 0 points the effective rate reads “n/a”.
7. Click Calculate, then switch tabs: the Summary tab states the deal in words, and the Yearly schedule tab shows the balance, principal, and interest for each full year of the term.

Invalid inputs are rejected with a plain message instead of a number: a blank loan (“Enter the loan amount.”), a loan of zero or less (“Loan amount must be greater than zero.”), a blank or negative rate, an amortization below 1 year, and a term below 1 year each get their own message. A blank NOI or a blank points figure is not an error: NOI becomes “no verdict” and points become 0%.

How commercial loans differ from residential loans

The balloon is the defining feature, and everything else follows from who the lender is really underwriting. A home loan underwrites the borrower’s income; a commercial loan underwrites the property’s cash flow.

This page is the investor balloon loan, and that identity matters for what it is not. A purchase-loan tool starts from a property price minus a down payment and prices the cost of buying; this tool starts from the loan itself and answers the maturity question: what is still owed, what does the property have to earn to carry it, and what does the loan really cost once points are counted. If you need the income side of the same underwriting, the cap rate calculator covers it, the multifamily mortgage calculator covers property-type-specific payments, the construction mortgage calculator models the build phase, and the mortgage payment calculator covers the residential, fully amortizing case.

The balloon math, step by step

Monthly payment uses the amortization schedule, not the term. With r equal to 0.065 divided by 12 (0.0054167 a month) and N equal to 300 months, the payment is L times r times (1 plus r) to the power N, divided by (1 plus r) to the power N minus 1. That is $1,000,000 times 0.0054167 times 5.0562, divided by 4.0562, which is $6,752.07 a month, displayed rounded to $6,752.

The balance after 120 payments is $1,000,000 times 1.9122 minus $6,752.07 times 168.40, which is $775,114. The mortgage constant, annual debt service divided by loan amount, is $81,025 divided by $1,000,000, which is 8.10%: the quickest way to compare loans is asking how many cents of annual payment each dollar borrowed costs. With 1 point of origination fee, the true effective rate (the internal rate of return on net proceeds of $990,000, with the balloon included) is 6.650%, not the quoted 6.5%. The yearly schedule shows why the balloon stays so large: in year 1 only $16,511 of the $81,025 paid is principal and $64,514 is interest, leaving $983,489 still owed. By year 10 the split has improved to $29,590 principal and $51,435 interest, but $775,114 is still outstanding and due in full, usually refinanced. Borrowers who do not plan the exit, refinance, sale, or cash, get trapped.

DSCR: the number that approves or kills the loan

Debt Service Coverage Ratio is net operating income divided by annual debt service. The worked example is $110,000 divided by $81,025, which is 1.36x, meaning the property earns 36% more than its mortgage costs. The tool’s verdict bands are: 1.25x and above meets the typical 1.25x lender bar, 1.0x to 1.25x is a thin cushion where you should expect lender scrutiny, and below 1.0x the property does not cover its own mortgage. That 1.25x bar is labelled typical for a reason: it varies by property type and lender, and regulators expect banks to set their own minimum DSCR guidelines per loan type rather than applying one universal figure. Two limits of this tool’s DSCR deserve stating plainly. First, it uses principal and interest only: some lenders include taxes, insurance, and reserves in debt service, which lowers the ratio. Second, it says nothing about debt yield, which is NOI divided by the loan amount (11.0% on the worked example) and is the rate-independent check lenders use alongside DSCR. A deal can clear DSCR while still looking thin on debt yield if the rate is unusually low, so check both before calling a deal safe.

What moves a commercial rate, and what this tool does not price

No rate table in this article claims a current market rate, because a single table cannot be right for every property. What moves a quote is well established: property type (multifamily and industrial usually price tighter than office and hospitality), LTV, DSCR and debt yield, sponsor strength and experience, loan size, market, and the prepayment structure, with yield maintenance and defeasance usually earning tighter pricing than an open prepayment option. Get live quotes for your property type and leverage instead of trusting a dated table, and compare them with the mortgage constant and the effective rate with points, not the quoted rate alone. This tool also does not model the 365/360 day-count most commercial loans use, which lifts the effective cost slightly above the monthly model, nor prepayment or defeasance penalties, reserves, taxes, insurance, or variable rates. It is a fixed-rate, monthly-payment model for comparing structures, not a lender commitment.

What competing calculators miss

The serious rivals in this space both compute payments and balloons, but each leaves a hole that changes the decision:

• No effective rate with points: a tool without it makes a 6.5% quote with 2 points look identical to a 6.5% quote with none, when the true costs differ by thousands over the term. This page solves the internal rate on net proceeds, balloon included.
• DSCR kept in a separate tool: a tool that forces you to hand-carry the payment across to a second calculator invites a transcription error at exactly the step that decides approval. Here payment, balloon, constant, effective rate, and DSCR sit on one screen.
• No mortgage constant: without it, comparing two loan structures means re-reading two schedules. The constant reduces each structure to one number: cents of annual payment per dollar borrowed.
• No zero-rate path: the previous version of this very tool returned NaN at a 0% rate. The rewrite guards that case with straight-line math, so a seller-financed or interest-free scenario still returns a real answer.

Planning the balloon: three exits, decided before you sign

A balloon loan is a bet that one of three things will be true at maturity, and the honest move is to name which one before borrowing. Refinance is the usual plan, but it only works if the property still appraises, still covers debt service at the then-current rate, and still meets the lender’s DSCR and LTV tests; a rate rise or a value fall can break all three at once. Sale works if the property’s value covers the balloon plus selling costs, which is why the terminal balance, not just the payment, belongs in every acquisition model. Cash payoff is the safest and rarest: it needs the balloon saved or reserved over the term, which the yearly schedule lets you plan year by year. If none of the three is credible, the right answer is a smaller loan, a longer term, or a fully amortizing structure: set the loan term equal to the amortization period in this calculator and the balloon drops to zero, as the SBA 504 structure does for owner-occupied property, at the price of stricter underwriting.

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