Commercial Mortgage Calculator
Estimate commercial loan payments, annual debt service, total interest, balloon balance and debt service coverage ratio.
Estimated Commercial Loan Results
Planning a Commercial Real Estate Purchase?
Financing is only one part of a commercial acquisition. I can help you identify properties, compare opportunities, review deal terms and navigate the commercial real estate transaction.
Phone:
717-379-4210
Email:
sam@simoisili.com
Samuel Imoisili, Associate Broker, ABR®, CIPS®, REALTOR®
eXp Realty LLC
This calculator provides general estimates for educational purposes only. It does not constitute a loan quote, lending approval, financial advice, legal advice, tax advice or a guarantee of financing terms. Actual commercial loan structures, rates, fees, amortization periods, balloon provisions and lender requirements vary.
How Commercial Mortgage Payments Are Calculated
Commercial real estate loans are commonly used to finance office buildings, retail properties, warehouses, industrial properties, multifamily investments, mixed-use buildings and owner-occupied business properties.
The monthly principal and interest payment generally depends on the loan amount, interest rate and amortization period.
A commercial loan may also have a maturity date that is shorter than its amortization schedule. This distinction can create a balloon payment at the end of the loan term.
Commercial Loan Amount and Down Payment
The estimated loan amount is calculated by subtracting the down payment from the purchase price.
For example, purchasing a $1,500,000 commercial property with a 25% down payment would produce an estimated initial loan amount of $1,125,000.
What Is Commercial Loan Amortization?
Amortization refers to the period used to calculate scheduled loan payments. Each payment typically includes both principal and interest.
A longer amortization period generally produces a lower scheduled payment, while a shorter amortization period generally results in a higher payment, assuming the other loan terms remain the same.
Commercial Loan Term vs. Amortization Period
Commercial mortgages often differ from traditional residential mortgages because the loan term may be shorter than the amortization period.
Loan amortization: 25 years
Loan maturity: 10 years
The monthly payment may be calculated as though the loan will be repaid over 25 years, but the remaining unpaid balance may become due after 10 years.
That remaining balance is commonly called the balloon balance. The borrower may need to refinance the balance, sell the property or otherwise satisfy the loan at maturity.
What Is a Commercial Mortgage Balloon Payment?
A balloon payment is the remaining principal balance due when a loan reaches maturity before it has been fully amortized.
The calculator above estimates the unpaid loan balance at the maturity date based on the information entered.
Actual commercial loan agreements may contain additional provisions, fees, prepayment restrictions or refinancing requirements that are not reflected in this calculator.
What Is Annual Debt Service?
Annual debt service is the total estimated principal and interest paid during a year.
Commercial investors frequently compare annual debt service with a property’s NOI when evaluating whether the property’s income appears sufficient to support the financing.
What Is Debt Service Coverage Ratio?
Debt Service Coverage Ratio, commonly called DSCR, compares a property’s annual net operating income with its annual debt service.
Annual NOI: $150,000
Annual debt service: $120,000
$150,000 ÷ $120,000 = 1.25
Estimated DSCR: 1.25
A DSCR above 1.00 means the calculated NOI exceeds the estimated annual loan payments. A DSCR below 1.00 indicates that the calculated NOI would not fully cover the estimated debt service.
Lender requirements vary significantly, so a calculator result should not be interpreted as a financing qualification or approval.
What Is Loan-to-Value Ratio?
Loan-to-value ratio, or LTV, compares the loan amount with the property’s purchase price or applicable valuation.
A larger down payment generally produces a lower LTV, while a smaller down payment results in a higher LTV.
Commercial Mortgage Calculator FAQs
Are commercial mortgage rates the same as residential mortgage rates?
Not necessarily. Commercial loan pricing and terms depend on the lender, property type, borrower, loan structure, market conditions and other factors.
Do all commercial loans have balloon payments?
No. Loan structures vary. Some commercial loans fully amortize during the term, while others mature before the amortization schedule is complete and therefore may have a balloon balance.
Does this calculator include taxes and insurance?
No. The monthly payment shown represents estimated principal and interest. Property taxes, insurance, reserves, association expenses and other ownership costs should be evaluated separately.
Does the calculator include lender fees?
No. Origination fees, appraisal costs, legal expenses, environmental reports, lender charges and other financing costs are not included.
Can I use this calculator for an SBA commercial loan?
The payment calculation may provide a preliminary estimate, but SBA loan structures, fees and requirements can differ. Actual terms should be obtained from the lender.
What happens when a commercial loan balloon payment is due?
Depending on the loan and borrower circumstances, the remaining balance may be paid, refinanced or satisfied through a property sale or another permitted arrangement.
Looking to Buy, Sell or Lease Commercial Real Estate?
Whether you’re purchasing an investment property, buying a building for your business, leasing space or considering selling a commercial asset, let’s discuss your objectives.
Phone:
717-379-4210
Email:
sam@simoisili.com
Website:
www.simoisili.com
Samuel Imoisili, Associate Broker, ABR®, CIPS®, REALTOR®
eXp Realty LLC