Home Loan Effective Interest Rate Calculator After Tax Rebate
by
Commercial Real Estate Loan Calculator
Calculate monthly payments, balloon payments, and total interest for CRE investments.
Usually 20, 25, or 30 years.
Often shorter than amortization in CRE (e.g., 5 or 10 years).
Loan Summary
Monthly Payment:$6,752.05
Balloon Payment (at end of term):$784,541.22
Total Interest (until term):$594,787.22
Total Principal Paid:$215,458.78
How to Use the Commercial Real Estate Loan Calculator
Calculating commercial real estate (CRE) loans is significantly different from residential mortgages. Commercial loans often feature a "balloon payment" structure where the monthly payment is calculated based on a long amortization schedule, but the loan itself must be repaid in full or refinanced after a much shorter period.
Key Definitions
Loan Amount: The total capital borrowed from the lender.
Interest Rate: The annual percentage rate charged by the bank. CRE rates are typically higher than residential rates.
Amortization Period: The number of years used to calculate the size of your monthly payment. A longer amortization period reduces the monthly payment but increases total interest.
Loan Term: The actual lifespan of the loan. In commercial lending, it is common to have a 25-year amortization with a 5-year or 10-year term. At the end of the term, the remaining balance (the balloon) is due.
Example Scenario
Imagine you are purchasing an office building for $1.5 million and you put down 30%, requiring a $1,050,000 loan. The bank offers a 6% interest rate with a 20-year amortization and a 10-year term.
Using this calculator, you would see that your monthly payment is $7,522.68. However, because the loan term is only 10 years, you will owe a balloon payment of $693,522.25 at the end of the 10th year. Investors typically refinance or sell the property before this date to cover the balloon payment.
Important Considerations for CRE Borrowers
When lenders evaluate your commercial loan application, they look at more than just the loan-to-value (LTV) ratio. They also examine:
Debt Service Coverage Ratio (DSCR): This measures the property's ability to cover the debt. Most lenders require a DSCR of 1.2x or higher (Net Operating Income divided by total debt service).
Net Operating Income (NOI): The total income from the property minus operating expenses.
Prepayment Penalties: Commercial loans often include "yield maintenance" or "defeasance" clauses that make it expensive to pay the loan off early.
function calculateCRE() {
var amount = parseFloat(document.getElementById('cre_loan_amount').value);
var rate = parseFloat(document.getElementById('cre_interest_rate').value) / 100 / 12;
var amortYears = parseFloat(document.getElementById('cre_amort_years').value);
var loanTermYears = parseFloat(document.getElementById('cre_loan_term').value);
if (isNaN(amount) || isNaN(rate) || isNaN(amortYears) || isNaN(loanTermYears) || amount <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
var totalAmortMonths = amortYears * 12;
var totalTermMonths = loanTermYears * 12;
// Monthly Payment Calculation (Standard Amortization Formula)
// PMT = P * [r(1+r)^n] / [(1+r)^n – 1]
var monthlyPayment = (amount * rate * Math.pow(1 + rate, totalAmortMonths)) / (Math.pow(1 + rate, totalAmortMonths) – 1);
// Balloon Payment Calculation
// Remaining Balance = P * [(1+r)^n – (1+r)^p] / [(1+r)^n – 1]
// where n = total amort periods, p = periods elapsed
var balloonPayment = amount * (Math.pow(1 + rate, totalAmortMonths) – Math.pow(1 + rate, totalTermMonths)) / (Math.pow(1 + rate, totalAmortMonths) – 1);
// Total calculations
var totalPaymentsToTerm = monthlyPayment * totalTermMonths;
var totalPrincipalPaid = amount – balloonPayment;
var totalInterestPaid = totalPaymentsToTerm – totalPrincipalPaid;
// Output formatting
document.getElementById('res_monthly').innerHTML = formatCurrency(monthlyPayment);
document.getElementById('res_balloon').innerHTML = formatCurrency(balloonPayment);
document.getElementById('res_interest').innerHTML = formatCurrency(totalInterestPaid);
document.getElementById('res_principal_paid').innerHTML = formatCurrency(totalPrincipalPaid);
}
function formatCurrency(val) {
if (val < 0) val = 0;
return '$' + val.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
// Run initial calculation
calculateCRE();