This calculator helps investors and business owners estimate monthly payments, total interest, and potential balloon payments for commercial real estate loans. Unlike residential mortgages, commercial loans often have different amortization schedules and loan terms resulting in a final balloon payment.
How the payment is calculated.
When the full balance is due.
function calculateCommercialLoan() {
var priceInput = document.getElementById('clc-price');
var downInput = document.getElementById('clc-down');
var rateInput = document.getElementById('clc-rate');
var termInput = document.getElementById('clc-term');
var amortInput = document.getElementById('clc-amort');
var resultDiv = document.getElementById('clc-result');
var price = parseFloat(priceInput.value);
var down = parseFloat(downInput.value);
var rate = parseFloat(rateInput.value);
var termYears = parseInt(termInput.value);
var amortYears = parseInt(amortInput.value);
resultDiv.style.display = 'block';
// Input Validation
if (isNaN(price) || isNaN(down) || isNaN(rate) || isNaN(termYears) || isNaN(amortYears) || price <= 0 || termYears <= 0 || amortYears = price) {
resultDiv.innerHTML = 'Down payment cannot be greater than or equal to the property price.';
return;
}
if (termYears > amortYears) {
resultDiv.innerHTML = 'Loan term cannot exceed the amortization period.';
return;
}
var loanPrincipal = price – down;
var monthlyInterestRate = (rate / 100) / 12;
var totalAmortMonths = amortYears * 12;
var termMonths = termYears * 12;
// Calculate Monthly Payment based on Amortization schedule
var monthlyPayment = 0;
if (monthlyInterestRate === 0) {
monthlyPayment = loanPrincipal / totalAmortMonths;
} else {
// Standard mortgage PMT formula
monthlyPayment = loanPrincipal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, totalAmortMonths)) / (Math.pow(1 + monthlyInterestRate, totalAmortMonths) – 1);
}
// Calculate Balloon (Remaining Balance at end of Term)
var balloonPayment = 0;
var remainingBalance = loanPrincipal;
var totalInterestPaid = 0;
// Iteratively calculate balance to ensure accuracy for balloon
for (var i = 0; i < termMonths; i++) {
var interestForMonth = remainingBalance * monthlyInterestRate;
var principalForMonth = monthlyPayment – interestForMonth;
remainingBalance -= principalForMonth;
totalInterestPaid += interestForMonth;
}
// If term is shorter than amortization, the remaining balance is the balloon
if (termMonths 0.01) {
balloonPayment = remainingBalance;
}
} else {
// If term equals amortization, balance should be near zero.
balloonPayment = 0;
}
// Formatting currency helper func
function formatCurrency(num) {
return '$' + num.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}
var outputHtml = '
';
outputHtml += 'Monthly P&I Payment: ' + formatCurrency(monthlyPayment) + '';
if (balloonPayment > 0) {
outputHtml += 'Balloon Payment due at end of Year ' + termYears + ': ' + formatCurrency(balloonPayment) + ";
outputHtml += 'Because your loan term (' + termYears + ' years) is shorter than your amortization schedule (' + amortYears + ' years), a significant balance is due at maturity.';
} else {
outputHtml += 'Loan is fully amortized over the term. No balloon payment.';
}
outputHtml += '
Commercial real estate financing differs significantly from residential lending. The key differentiator emphasized in this calculator is the relationship between the Amortization Period and the Loan Term.
Amortization vs. Loan Term
The Amortization Period is the timeframe used to calculate your monthly payment amount to spread the principal repayment out. The Loan Term is how long you actually have the loan before the bank requires full repayment.
Scenario A (Fully Amortized): If your amortization and term are both 20 years, your final monthly payment pays off the loan completely.
Scenario B (Balloon Loan): It is very common in commercial lending to have payments amortized over 25 years to keep monthly costs low, but have a Loan Term of only 5 or 10 years. At the end of that 5 or 10-year term, the remaining unpaid principal balance is due immediately as a "Balloon Payment."
Example Calculation
Imagine purchasing a commercial property for $2,000,000 with a $500,000 (25%) down payment, leaving a loan principal of $1,500,000.
If the bank offers a 6.5% interest rate, amortized over 25 years, but with a 10-year term:
Your Monthly Payment would be approximately $10,128.
At the end of year 10, you would owe a Balloon Payment of approximately $1,136,964 because the loan was paying down slowly on a 25-year schedule.
Investors must plan to either refinance this balloon amount or pay it off with cash reserves at the end of the term.
Use the calculator above to define your specific scenario and understand your potential cash flow requirements and future liabilities.