Estimate monthly payments, balloon totals, and total financing costs for income-producing properties.
Monthly Principal & Interest:$0.00
Upfront Fees (Points + Costs):$0.00
Total Interest (Over Term):$0.00
Estimated Balloon Payment:$0.00
Total Cost of Loan:$0.00
Understanding Commercial Real Estate Financing
Commercial Real Estate (CRE) loans differ significantly from residential mortgages. While residential loans are typically 30-year fixed-rate products, CRE loans are often structured with shorter terms and "balloon" payments, requiring a unique calculation approach.
Key Components of a CRE Loan
Amortization Period: This is the length of time used to calculate your monthly payment. In commercial lending, 20 to 25 years is standard.
Loan Term: This is how long you actually have the money. Most commercial loans have a term of 5, 7, or 10 years. At the end of this term, the remaining balance is due in full (the Balloon Payment).
Loan-to-Value (LTV): Most commercial lenders require a lower LTV than residential lenders, often between 65% and 80%.
Debt Service Coverage Ratio (DSCR): Lenders analyze the property's income to ensure it can cover the debt payments. A DSCR of 1.25x or higher is usually required.
Practical Example
If you purchase a warehouse for $1,000,000 with a 6.5% interest rate, a 25-year amortization, and a 10-year term:
Your monthly payment would be $6,752.05.
After 10 years of payments, you would still owe a balance of $778,746.12.
This balance is the "Balloon Payment" which you would typically refinance or pay off by selling the asset.
Why Use a Commercial Loan Calculator?
Investors use these calculations to determine Cash-on-Cash Return and overall Internal Rate of Return (IRR). By understanding the balloon payment, you can plan your exit strategy or refinancing timeline well in advance, avoiding the risk of a "maturity default."
How to Lower Your Commercial Loan Costs
To secure better rates, focus on improving the property's Net Operating Income (NOI). Lenders view stabilized, high-occupancy properties as lower risk, which translates to lower interest spreads and reduced origination points.
function calculateCRELoan() {
// Get Input Values
var loanAmount = 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);
var pointsPercent = parseFloat(document.getElementById("cre_points").value);
var closingCosts = parseFloat(document.getElementById("cre_closing_costs").value);
// Validation
if (isNaN(loanAmount) || isNaN(annualRate) || isNaN(amortYears) || loanAmount <= 0) {
alert("Please enter valid numbers for Loan Amount, Rate, and Amortization.");
return;
}
// Calculations
var monthlyRate = (annualRate / 100) / 12;
var totalAmortMonths = amortYears * 12;
var totalTermMonths = termYears * 12;
// Monthly Payment Calculation (Standard Amortization Formula)
var monthlyPayment = 0;
if (monthlyRate === 0) {
monthlyPayment = loanAmount / totalAmortMonths;
} else {
monthlyPayment = loanAmount * (monthlyRate * Math.pow(1 + monthlyRate, totalAmortMonths)) / (Math.pow(1 + monthlyRate, totalAmortMonths) – 1);
}
// Balloon Payment Calculation (Future Value of Remaining Balance)
var balloonPayment = 0;
if (termYears < amortYears) {
var pvOfRemaining = loanAmount * Math.pow(1 + monthlyRate, totalTermMonths) – (monthlyPayment * (Math.pow(1 + monthlyRate, totalTermMonths) – 1) / monthlyRate);
balloonPayment = pvOfRemaining;
} else {
balloonPayment = 0; // Fully amortized
}
// Fees and Interest
var upfrontFees = (loanAmount * (pointsPercent / 100)) + closingCosts;
var totalInterestPaid = 0;
var currentBalance = loanAmount;
// Calculate interest specifically over the Loan Term
for (var i = 0; i < totalTermMonths; i++) {
var interestForMonth = currentBalance * monthlyRate;
var principalForMonth = monthlyPayment – interestForMonth;
totalInterestPaid += interestForMonth;
currentBalance -= principalForMonth;
}
var totalCostOfLoan = totalInterestPaid + upfrontFees;
// Display Results
document.getElementById("cre_results_box").style.display = "block";
document.getElementById("res_monthly_pay").innerText = formatCurrency(monthlyPayment);
document.getElementById("res_upfront").innerText = formatCurrency(upfrontFees);
document.getElementById("res_total_interest").innerText = formatCurrency(totalInterestPaid);
document.getElementById("res_balloon").innerText = formatCurrency(balloonPayment);
document.getElementById("res_total_cost").innerText = formatCurrency(totalCostOfLoan);
}
function formatCurrency(val) {
if (val < 0) val = 0;
return "$" + val.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
// Initialize on load
window.onload = function() {
calculateCRELoan();
};