Estimate monthly payments, balloon payments, and total debt service for commercial properties.
Loan Amount
$0.00
Monthly Payment
$0.00
LTV Ratio
0%
Balloon Payment
$0.00
Note: Since your loan term is shorter than your amortization period, a balloon payment will be due at the end of Year .
Understanding Commercial Real Estate Loans
Commercial real estate (CRE) loans differ significantly from residential mortgages. While a home loan is typically amortized over 30 years and the loan term matches that period, commercial loans often feature shorter terms with longer amortization schedules. This creates a "balloon payment" structure.
Key Metrics in Commercial Lending
Loan-to-Value (LTV): Most commercial lenders require an LTV between 65% and 80%. A lower LTV often secures a better interest rate.
Amortization vs. Term: You might have a 25-year amortization (to keep monthly payments low) but a 10-year term. This means after 10 years, the remaining balance must be paid in full or refinanced.
DSCR (Debt Service Coverage Ratio): Lenders use this to ensure the property generates enough income to cover the debt. Usually, a DSCR of 1.20x or higher is required.
Calculation Example: Retail Strip Mall
Purchase Price: $2,000,000
Down Payment (25%): $500,000
Interest Rate: 7%
Structure: 25-year amortization with a 10-year term.
In this scenario, the monthly payment would be roughly $10,601. At the end of the 10th year, the borrower would owe a balloon payment of approximately $1,170,000.
How to Use This Calculator
To get the most accurate estimate, enter the full purchase price and your intended down payment. The interest rate for commercial properties is usually higher than residential rates. Ensure you distinguish between the Amortization Period (how the payment is calculated) and the Loan Term (when the money is actually due back to the bank).