Loan Parameters
Modeled for a commercial mortgage structure where the maturity term can be shorter than the amortization period, creating a balloon payoff at maturity.
Purchase Price $5M
$
Loan Amount $3.75M
$
Annual Interest Rate 6.50%
%
Interest-Only Period 2 Years
Yr
Maturity / Term 10 Years
Yr
Amortization 25 Years
Yr
First-Year NOI $220K
$
Start Date
Cal
LTV
-
loan-to-value ratio
Down Payment
-
equity at closing
I/O Payment / mo
-
during interest-only period
P&I Payment / mo
-
after I/O period
Annual Debt Service
-
first-year debt payments
Balloon at Maturity
-
remaining balance due
Equity at Maturity
-
price less balloon balance
DSCR
-
NOI / annual debt service
Payoff Date
-
balloon maturity date
Payment Breakdown
Live
Interest
Principal
Balance
Amortization Schedule
| Period | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| Enter commercial loan details above to see the schedule | ||||
How This Commercial Mortgage Calculator Works
Commercial real estate loans often have a shorter maturity than their amortization period. That means the loan may be structured to amortize over 20 to 30 years, but the actual note might mature in 5 to 10 years. At maturity, the remaining principal becomes a balloon payoff.
Key Commercial Loan Formulas
LTV = Loan Amount ÷ Purchase Price
Monthly I/O Payment = Loan Amount × Annual Rate ÷ 12
DSCR = First-Year NOI ÷ Annual Debt Service
Monthly I/O Payment = Loan Amount × Annual Rate ÷ 12
DSCR = First-Year NOI ÷ Annual Debt Service
Amortizing Payment Formula
After the interest-only period, the remaining balance is amortized over the remaining amortization window.
PMT = PV × [i × (1+i)^n] ÷ [(1+i)^n - 1]
PV = remaining balance | i = monthly interest rate | n = amortization months remaining
PV = remaining balance | i = monthly interest rate | n = amortization months remaining
What This Tool Shows
- Estimated down payment and LTV at closing
- Interest-only payment during the IO period
- Amortizing principal-and-interest payment after IO
- Annual debt service for DSCR review
- Balloon balance due at maturity
- Equity created by principal reduction before maturity
Disclaimer: This calculator provides estimates for educational use only. Commercial mortgage
terms vary by lender, property type, prepayment structure, reserves, fees, and underwriting requirements.
Frequently Asked Questions
What is a balloon payment in commercial real estate?
+
A balloon payment is the remaining loan balance due when the commercial mortgage matures.
Because the loan may amortize over a longer period than the note term, part of the principal is still unpaid
at maturity.
Why is amortization longer than maturity?
+
This structure keeps monthly payments lower while allowing the lender to reprice or refinance
the debt sooner. It is common in commercial mortgages where a 5-, 7-, or 10-year term may ride on a 20- or
25-year amortization.
What does DSCR mean?
+
DSCR stands for Debt Service Coverage Ratio. It compares the property's net operating income
to its annual loan payments. A DSCR above 1.00 means NOI covers debt service, while many lenders target a
higher threshold for approval.
Can this calculator model interest-only loans?
+
Yes. Set an interest-only period greater than zero and the tool will calculate lower IO
payments first, then switch to amortizing payments for the rest of the note term.