Commercial Real Estate Loan Calculator
Calculate monthly payments, balloon payments, and total financing costs for commercial properties.
Monthly Principal & Interest:
$0.00
Upfront Loan Fees:
$0.00
Total Interest Paid (Over Term):
$0.00
Balloon Payment (End of Term):
$0.00
Understanding Commercial Real Estate Loans
Financing a commercial property is significantly different from a residential mortgage. Commercial real estate (CRE) loans are typically used for offices, retail spaces, industrial buildings, and multi-family apartments. Unlike residential loans which are often fixed for 30 years, commercial loans feature unique structures like shorter terms and balloon payments.
Key Terminology in Commercial Lending
- Amortization Period: This is the length of time used to calculate your monthly payment. For commercial loans, this is often 20 to 25 years.
- Loan Term: This is the actual duration of the loan. Most commercial loans have a "balloon" structure where the term is shorter than the amortization (e.g., a 10-year term with a 25-year amortization).
- Balloon Payment: At the end of the Loan Term, the remaining balance of the principal is due in one lump sum. Investors typically refinance the property or sell it to cover this payment.
- Origination Fee: A fee charged by the lender for processing the loan, usually ranging from 0.5% to 2% of the total loan amount.
Example Calculation
Imagine you are purchasing a warehouse with a $1,000,000 loan at a 6.5% interest rate. The lender offers a 25-year amortization but a 10-year term.
Your monthly payment would be $6,752.05. Over the 10-year term, you would pay approximately $561,000 in total interest. However, because the loan is only for 10 years but calculated as if it were 25, you will owe a balloon payment of roughly $784,000 at the end of year 10.
How to Use This Calculator
To get an accurate estimate of your commercial financing costs, enter the requested loan amount and current market interest rates. Ensure you distinguish between the amortization period (which lowers your monthly payment) and the actual loan term (which determines when you must pay back the balance).