Commercial Mortgage Calculator
What Is a Commercial Mortgage Calculator?
It’s a simple tool that tells you what you’ll really pay on a commercial property loan. Monthly payments. Total interest. And the balloon payment that catches most people off guard.
Commercial loans aren’t like home loans. The terms are shorter. You need more cash upfront. And there’s usually a big payment due at the end. This calculator shows you all that before you sign anything.
What You Put Into the Calculator
Loan Amount
How much you’re borrowing. Lenders usually want 20-35% down on commercial property. Your loan amount is what’s left after your down payment.
Interest Rate
The yearly percentage the lender charges you. Commercial rates usually run between 5% and 10%.
Amortization Period
How long it would take to pay off the whole loan if you kept making payments. Usually 20, 25, or 30 years. This isn’t the same as your loan term.
Loan Term
When your loan actually ends. Usually 5, 7, or 10 years. Whatever you still owe comes due all at once. That’s your balloon payment.
Payment Frequency
How often you pay. Monthly is most common. Some lenders let you pay quarterly or twice a year.
Origination Fee
What the lender charges to process your loan. Usually 0.5% to 1% of what you’re borrowing. Also called points.
Closing Costs
Appraisals, environmental reports, title searches, legal fees, inspections. Commercial closing costs typically run 2-5% of the loan amount.
What the Calculator Gives You
| What It Shows | What It Means |
|---|---|
| Estimated Payment | What you’ll pay each month |
| Balloon Balance | What you’ll still owe when the loan ends |
| Principal Paid | How much of the loan you pay down |
| Interest Through Term | Total interest you’ll pay |
| Total Payments | Everything you pay during the term |
| Full Amortization Interest | Interest if you kept the loan the whole time |
Why the Balloon Payment Matters
Your loan term is shorter than your amortization. When the term ends, you still owe money. That’s the balloon.
The balloon amount is often huge. After 10 years on a 25-year amortization, you’ll still owe about 80% of what you borrowed.
What you can do when the balloon hits: Refinance with a new lender. Sell the property. Or pay it off with cash. Most people refinance.
Types of Commercial Mortgages
Permanent Loans
Fixed-rate loans for properties already making money. Terms run 5-10 years. Most common type.
Bridge Loans
Short-term money when you need to close fast. 1-3 years. Higher interest rates.
Construction Loans
Short-term loans for building or major renovations. You draw money as work gets done. Converts to permanent loan after construction.
SBA 7(a) Loans
Government-backed loans for small business owners. Can be used for buying property, equipment, or working capital. Up to $5 million. Terms up to 25 years for real estate.
SBA 504 Loans
Government-backed loans specifically for buying fixed assets like real estate and equipment. Lower down payments (as low as 10%). Long-term fixed rates.
CMBS Loans
Loans pooled and sold to investors. Lower rates but stricter rules and prepayment penalties. Good for loans over $5 million.
Hard Money Loans
Private lender loans. Higher rates but fast approval. For properties that don’t qualify for traditional financing.
Blanket Loans
One loan covering multiple properties. Makes management easier for portfolio investors.
Mezzanine Loans
Financing that fills the gap between the senior loan and the borrower’s equity. Higher rates but useful when you need extra capital.
Commercial Bridge-to-Permanent Loans
A single loan that starts as a bridge loan and automatically converts to permanent financing after the property stabilizes.
Owner-Occupied Commercial Loans
Loans for business owners buying property they’ll use themselves. Usually better terms than investor loans.
Investment Property Loans
Loans for investors buying property they’ll rent out. Lenders usually require higher down payments and charge higher rates.
Refinance Loans
Loans that replace your existing commercial mortgage. Done to get better rates, pull cash out, or avoid balloon payments.
Multifamily Loans
Specifically for apartment buildings and residential complexes. Usually 5-30 unit properties.
Mixed-Use Property Loans
For properties with both commercial and residential space. Retail on ground floor, apartments above.
Industrial Property Loans
For warehouses, factories, distribution centers, and manufacturing facilities.
Retail Property Loans
For shopping centers, storefronts, and retail spaces.
Office Building Loans
For office spaces, medical offices, and professional buildings.
Hospitality Loans
For hotels, motels, and other lodging properties.
Self-Storage Loans
For self-storage facilities. Considered stable investments.
Medical Office Loans
Specialized loans for medical and dental office buildings.
Terms You Should Know
Debt Service Coverage Ratio (DSCR)
Property income divided by loan payments. Lenders want at least 1.25. Property makes 25% more than you need for payments.
Loan-to-Value Ratio (LTV)
How much you borrow compared to property value. Lenders cap at 65-75%. You need 20-35% down.
Prepayment Penalties
Fees for paying the loan off early. Three types: yield maintenance, defeasance, step-down.
Personal Guarantee
Most lenders require you to personally guarantee the loan. Even if your LLC owns the property.
Mistakes to Avoid
Thinking your term matches your amortization – It doesn’t. You’ll still owe money at the end.
Ignoring prepayment penalties – Read the fine print before you sign.
Forgetting about the balloon – That balance is real and it’s due. Have a plan.
Treating it like a home loan – Commercial loans are different.
Only looking at the monthly payment – The balloon is the bigger number.
When to Refinance
Most borrowers refinance before the balloon payment hits. Good times to think about it:
- When your term is about to end
- When rates have dropped
- When your property value has gone up
- When your income has improved
- When you want to pull cash out
Start the process 6-12 months before your balloon date.