Commercial Mortgage Calculator
See your monthly payment AND the balloon balance still due in year 5–10 — the number commercial borrowers get blindsided by.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator estimates the monthly payment on a commercial property loan — and, more importantly, the balloon balance you will still owe when the loan comes due. Most commercial mortgages amortize over 20–25 years but mature (balloon) at year 5–10, so a large lump sum remains outstanding long before the payments would ever pay the loan off. It also shows cash needed to close, total interest through the balloon, an APR that includes closing costs, and the debt-service coverage ratio (DSCR) lenders check.
The formulas
- Loan amount
- property price − down payment, where down payment = property price × down-payment %If the down payment reaches the full price there is no loan to amortize — the tool flags this instead of computing.
- Monthly payment (level-payment amortization)
- loan × (monthly rate × (1 + monthly rate)^number of payments) ÷ ((1 + monthly rate)^number of payments − 1), where monthly rate = annual rate ÷ 12 and number of payments = amortization years × 12At a 0% rate this simplifies to loan ÷ number of payments.
- Balloon balance
- remaining loan balance on the amortization schedule at the balloon month (balloon years × 12)If balloon years reach or exceed the amortization term (or the fully-amortizing toggle is on), the balloon is $0. When the loan balloons, the downloadable amortization schedule adds a final labeled "Balloon" row for the lump sum due after the regular payments.
- Total interest and total paid through the balloon
- total interest = sum of the interest portion of every payment through the balloon month; total paid = monthly payment × balloon months + balloon balance
- Cash to close
- down payment + closing costs, where closing costs = property price × closing-cost %
- APR including closing costs
- the internal rate of return that equates (loan − closing costs) received today with the stream of monthly payments plus the balloon at the endBecause closing costs reduce what you actually receive, this APR is always above the note rate.
- DSCR (debt-service coverage ratio)
- annual net operating income ÷ annual debt service (monthly payment × 12)The stress toggle recomputes DSCR with NOI reduced 20% to test your cushion.
Worked example
- Say the property costs $750,000 with 25% down, a 7.5% rate, 25-year amortization, a 7-year balloon, 3% closing costs, and $60,000/yr of net operating income.
- Down payment = $750,000 × 25% = $187,500, so the loan is $562,500; closing costs = $750,000 × 3% = $22,500, making cash to close $187,500 + $22,500 = $210,000.
- At 7.5% ÷ 12 = 0.625%/month over 300 payments, the level payment is $4,156.83/month — $49,881.96/yr of debt service.
- After 84 payments (year 7) the remaining balance is $491,947.52 — the balloon still due even though you have paid $278,620.84 of interest by then; total paid through the balloon is $841,121.24.
- Netting the $22,500 closing costs out of the loan proceeds pushes the all-in APR to about 8.30%, above the 7.5% note rate.
- DSCR = $60,000 ÷ $49,881.96 = 1.20 — below the 1.25× lender standard, so this deal would be a tight approval with little margin for vacancy or repairs.
Rates, benchmarks & sources
- DSCR minimum of 1.25× (NOI ≥ 1.25 × annual debt service); below 1.0 the property does not cover its own payments — Commercial lender underwriting standard (marked authoritative in our benchmark config)
- Monthly payment, remaining-balance schedule, and balloon balance — Standard level-payment amortization formula (financial convention)
- Commercial lenders typically require 20–30% down and amortize over 20–25 years with a 5–10 year balloon — Industry rule of thumb
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- This is an estimate, not a loan quote — actual rate, amortization, fees, and required down payment come from lender underwriting of you and the property.
- It does not model what happens at the balloon: the refinance rate you will face in year 5–10 is unknown today, and that rate risk is the real exposure.
- Closing costs are modeled as a flat percentage of price; real closings itemize lender fees, title, environmental reports, and legal costs that vary by deal.
- Taxes, depreciation, and the interest deduction are outside this tool — it measures cash flow to the lender only.
- NOI is taken as you enter it; lenders will underwrite from actual rent rolls and trailing-12 expenses, not your estimate.
Frequently asked questions
What is a balloon payment and why does my loan have one?
A balloon is the loan balance still owed when the loan matures before it fully amortizes. Commercial lenders price payments as if the loan ran 20–25 years but require repayment at year 5–10, so a large lump sum — often most of the original loan — comes due. In the default example, a $562,500 loan still has $491,947.52 outstanding at the year-7 balloon. Owners typically refinance or sell before that date rather than pay it in cash.
What is DSCR and what number do lenders want?
DSCR (debt-service coverage ratio) is the property’s annual net operating income divided by the annual loan payments. The widely used lender standard is a minimum of 1.25×, meaning the property earns 25% more than the debt costs; below 1.0 the property cannot cover its own payments. Our benchmark config records 1.25× as the lender-standard minimum, and the tool flags any result under it.
Why is the APR higher than the interest rate I entered?
The APR here folds closing costs into the cost of borrowing: you repay the full loan but only receive the loan minus closing costs at the start. The tool solves for the internal rate of return of that actual cash flow, so a 7.5% note rate with 3% closing costs works out to roughly an 8.30% APR on the default inputs. The shorter the time to the balloon, the more those upfront costs raise the effective rate.
Will a lender actually give me these terms?
Not necessarily — this tool estimates the math of a loan structure, not your approval. Actual terms depend on lender underwriting: the property’s documented NOI, your credit and net worth, the loan-to-value ratio, property type, and market conditions. Lenders commonly require 20–30% down (an industry rule of thumb, not a regulation) and NOI of at least 1.25× the debt service. Treat the output as a planning estimate to pressure-test a deal, not a quote.
What does the “stress test: NOI −20%” toggle do?
It recomputes the coverage ratio with your net operating income cut by 20%, simulating a lost tenant, extended vacancy, or an expense spike. If the stressed DSCR falls below 1.25× — or worse, below 1.0 — your coverage is fragile and a normal bad year could leave the property unable to make its payments. The stressed figure only appears once you turn the toggle on; with it on, the default inputs fall from a 1.20 DSCR to 0.96.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions. Rates shown are estimates; actual offers depend on lender underwriting.