Commercial Real Estate Loan Calculator
Commercial property loans are often repaid as if over 20 or 25 years but come due after 5 or 10, leaving a balloon payment. See the monthly payment, the balloon, the loan-to-value and whether the property income covers the debt.
Many commercial lenders lend 65% to 80% of the value, so 20% to 35% down is common.
Rent and other income minus operating costs, before the loan payment. Enter it to see the debt service coverage ratio.
An estimate for planning only, not an offer of credit. Your actual rate, terms and payment depend on your business and the lender. Nothing you enter is saved or sent.
See your real numbersYear-by-year breakdown
| Year | Balance paid | Interest paid | Balance left |
|---|
Example
A $1,500,000 property with 25% down needs a $1,125,000 loan. At 7.25%, repaid over 25 years with a 10-year term, the payment is about $8,132 a month. After ten years about $890,778 is still owed, and that balloon has to be paid, usually by refinancing or selling. If the property earns $160,000 a year after operating costs, the DSCR is 1.64x.
Amortization and term are not the same
A home mortgage is usually repaid over the same 30 years it lasts. Commercial loans often are not. The payment is worked out as if over 20 or 25 years (the amortization), but the loan comes due after 5, 7 or 10 years (the term). Whatever is still owed then is the balloon payment. Plan for it from day one: most owners refinance or sell before it falls due.
Loan-to-value and DSCR
Lenders size commercial property loans with two tests. Loan-to-value (LTV) is the loan divided by the property's value. Debt service coverage (DSCR) is the property's yearly net operating income divided by the yearly loan payments. A DSCR of 1.25x means the property earns 25% more than the payments. Our DSCR calculator shows the largest loan a property's income can support.
Ways to finance commercial property
Options include an SBA 504 or 7(a) loan for owner-occupied property, a conventional bank loan, and a bridge loan when you need to close quickly or before long-term financing is ready.
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Frequently asked questions
What is a balloon payment on a commercial loan?
The balance still owed when the loan term ends. Commercial loans are often repaid as if over 20 or 25 years but come due after 5 to 10 years, so a large balance remains. It is usually paid by refinancing or selling the property.
How much down payment do I need for a commercial property?
Many commercial lenders lend 65% to 80% of the property value, so 20% to 35% down is common. An SBA 504 loan for owner-occupied property can need as little as 10%.
What DSCR do lenders want?
Many lenders look for a debt service coverage ratio of about 1.25x or higher, meaning the property earns 25% more than the loan payments. Requirements vary by lender and property type.
Does this calculator work for a commercial mortgage refinance?
Yes. Enter the property value as the price and the share you will not borrow as the down payment. The payment, balloon and DSCR work the same way.
This calculator gives estimates for planning only. It is not an offer of credit, and the results are not financial advice.
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Tell us what your business needs and review available structures with a financing specialist.