Estimate monthly payments, balloon totals, and total interest for commercial property investments.
Monthly Payment
$0.00
Balloon Payment
$0.00
Total Interest Paid
$0.00
Total Loan Cost
$0.00
Understanding Commercial Real Estate Loans
Commercial Real Estate (CRE) loans differ significantly from residential mortgages. While residential loans are typically 15 or 30-year fixed terms that fully amortize, commercial loans often feature shorter terms (5 to 10 years) with longer amortization schedules (20 to 30 years). This creates a "Balloon Payment" at the end of the term.
Key Terms in This Calculator
Loan Amount: The total principal amount borrowed from the lender.
Amortization Period: The length of time used to calculate the monthly principal and interest payments. A longer amortization lowers the monthly payment but increases total interest.
Loan Term: The actual duration of the loan. In commercial lending, the term is often shorter than the amortization. For example, a "10/25" loan has a 10-year term and a 25-year amortization.
Balloon Payment: The remaining principal balance due at the end of the Loan Term. Borrowers usually refinance the property or sell it to cover this amount.
How to Use the Commercial Loan Calculator
Imagine you are purchasing an office building for $1,500,000. You put 25% down and take a loan for $1,125,000. If your lender offers a 6.75% interest rate with a 20-year amortization and a 5-year balloon term:
Enter 1,125,000 in the Loan Amount.
Enter 6.75 in the Interest Rate.
Enter 20 in the Amortization Period.
Enter 5 in the Loan Term.
The calculator will show you the monthly debt service and exactly how much you will owe the bank at the end of year 5.
Important Considerations for CRE Financing
Lenders also look closely at the Debt Service Coverage Ratio (DSCR), which is the property's Net Operating Income divided by the annual debt service. Most lenders require a DSCR of at least 1.2x to 1.25x to ensure the property generates enough cash flow to cover the loan payments.
function calculateCRELoan() {
var principal = parseFloat(document.getElementById('cre_loan_amount').value);
var annualRate = parseFloat(document.getElementById('cre_interest_rate').value);
var amortYears = parseFloat(document.getElementById('cre_amortization').value);
var termYears = parseFloat(document.getElementById('cre_loan_term').value);
if (isNaN(principal) || isNaN(annualRate) || isNaN(amortYears) || isNaN(termYears) || principal <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
var monthlyRate = annualRate / 100 / 12;
var totalAmortMonths = amortYears * 12;
var termMonths = termYears * 12;
// Monthly Payment Calculation (Amortization based)
var monthlyPayment = 0;
if (monthlyRate === 0) {
monthlyPayment = principal / totalAmortMonths;
} else {
monthlyPayment = principal * (monthlyRate * Math.pow(1 + monthlyRate, totalAmortMonths)) / (Math.pow(1 + monthlyRate, totalAmortMonths) – 1);
}
// Balloon Payment Calculation
// Balance = P * [(1+i)^n – (1+i)^p] / [(1+i)^n – 1]
var balloonPayment = 0;
if (termYears < amortYears) {
if (monthlyRate === 0) {
balloonPayment = principal – (monthlyPayment * termMonths);
} else {
var numerator = Math.pow(1 + monthlyRate, totalAmortMonths) – Math.pow(1 + monthlyRate, termMonths);
var denominator = Math.pow(1 + monthlyRate, totalAmortMonths) – 1;
balloonPayment = principal * (numerator / denominator);
}
} else {
balloonPayment = 0; // Fully amortized
}
// Interest Calculations
var totalPaidDuringTerm = monthlyPayment * termMonths;
var principalPaidDuringTerm = principal – balloonPayment;
var totalInterestPaid = totalPaidDuringTerm – principalPaidDuringTerm;
var totalLoanCost = totalInterestPaid + principal;
// Display Results
document.getElementById('res_monthly_pay').innerText = formatCurrency(monthlyPayment);
document.getElementById('res_balloon').innerText = formatCurrency(balloonPayment);
document.getElementById('res_total_interest').innerText = formatCurrency(totalInterestPaid);
document.getElementById('res_total_cost').innerText = formatCurrency(totalLoanCost);
document.getElementById('cre_results_box').style.display = 'block';
}
function formatCurrency(num) {
return '$' + num.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}