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How much is a commercial mortgage?

See the monthly payment on a commercial property loan, the balloon still owed when the term ends, and whether the property’s income covers the payments.

Your numbers

Commercial lenders often ask for 20% to 35% down.
An example rate, not today’s rate. Use the rate your lender quotes.
Often 5, 7, or 10 years.
More options
Monthly payment
$7,951.27

A $1,125,000.00 commercial mortgage at 7% amortized over 25 years costs $7,951.27 a month and leaves a $884,625.71 balloon after 10 years.

Balloon at the end of the term
$884,625.71
Loan amount
$1,125,000.00
Loan-to-value
75%
Interest over the term
$713,777.63
Total paid over the term
$1,838,777.63
Debt service coverage ratio
1.47
Balloon due
September 2036
Months
120

Answer for the example date Wednesday, September 30, 2026. It changes to today's date when the page loads.

Monthly payment: $7,951.27. A $1,125,000.00 commercial mortgage at 7% amortized over 25 years costs $7,951.27 a month and leaves a $884,625.71 balloon after 10 years.

How much is still owed when the balloon comes due?

Where does each year of payments go?

What does every payment look like?

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Computes the monthly payment, the balloon at the end of the term, the interest, the loan-to-value ratio, and the DSCR of a commercial real estate mortgage with an amortization period longer than its term.

Example with the default inputs (Property price $1,500,000.00, Down payment 25%, Interest rate 7%, Amortization period (years) 25, Loan term (years) 10, Interest-only period (years) 0, Net operating income $140,000.00, Loan start date September 30, 2026) on the example date Wednesday, September 30, 2026: A $1,125,000.00 commercial mortgage at 7% amortized over 25 years costs $7,951.27 a month and leaves a $884,625.71 balloon after 10 years.

Method: payment = L × r ÷ (1 − (1 + r)^−A), with L = price × (1 − down), r = rate ÷ 1200, and A the amortization months; balloon = L × (1 + r)^k − payment × ((1 + r)^k − 1) ÷ r after the k level payments in the term; DSCR = NOI ÷ (12 × payment).

  • The rate is fixed; interest is the balance × the yearly rate ÷ 12 each month.
  • Payments are made at the end of each month; after any interest-only months, the payment is figured over the whole amortization period.
  • The balance left after the last regular payment of the term is paid as a balloon with it.
  • Fees, reserves, and prepayment penalties are not included.
  • Values are not rounded to the cent between months; only the display is rounded.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Property price $1,500,000.00, Down payment 25%, Interest rate 7%, Amortization period (years) 25, Loan term (years) 10, Interest-only period (years) 0, Net operating income $140,000.00 gives Loan amount $1,125,000.00, Monthly payment $7,951.27, Balloon at the end of the term $884,625.71, Interest over the term $713,777.63, Debt service coverage ratio 1.467272.Source: Office of the Comptroller of the Currency, Comptroller’s Handbook, Commercial Real Estate Lending. https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/index-commercial-real-estate-lending.html
  2. Property price $2,000,000.00, Down payment 30%, Interest rate 6.5%, Amortization period (years) 30, Loan term (years) 7, Interest-only period (years) 2 gives Loan amount $1,400,000.00, Interest-only payment $7,583.33, Monthly payment $8,848.95, Balloon at the end of the term $1,310,553.68, Interest over the term $623,490.82.Source: Office of the Comptroller of the Currency, Comptroller’s Handbook, Commercial Real Estate Lending. https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/index-commercial-real-estate-lending.html
  3. Property price $800,000.00, Down payment 20%, Interest rate 0%, Amortization period (years) 20, Loan term (years) 5, Net operating income $60,000.00 gives Loan amount $640,000.00, Monthly payment $2,666.67, Balloon at the end of the term $480,000.00, Interest over the term $0.00, Debt service coverage ratio 1.875.Source: Office of the Comptroller of the Currency, Comptroller’s Handbook, Commercial Real Estate Lending. https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/index-commercial-real-estate-lending.html

How it works

Write P for the property price, d for the down payment as a decimal, r for the monthly rate (the yearly rate in percent ÷ 1200), A for the amortization period in months (years × 12), n for the term in months (years × 12), and m for the interest-only months.

  1. Loan: L = P × (1 − d). Loan-to-value = the loan as a percent of the price = 100 − the down payment percent.
  2. Interest-only months: m = the interest-only years × 12, rounded to the nearest whole month (a half month rounds up); 0 when left empty. m must be less than n, and the months after the interest-only period, n − m, must not be more than A. Otherwise there is no answer.
  3. Interest-only payment: L × r each month for the first m months; the balance stays at L.
  4. Level payment: payment = L × r ÷ (1 − (1 + r)^−A), figured over the whole amortization period starting when the interest-only months end. At 0% it is L ÷ A.
  5. Balloon: the balance after the k = n − m level payments: L × (1 + r)^k − payment × ((1 + r)^k − 1) ÷ r (at 0%, L − payment × k). It is due with the last regular payment. When n − m equals A, the loan is repaid by its payments and the balloon is 0.
  6. Schedule: each month, interest = balance × r and the rest of the payment lowers the balance. The last month also pays the balloon, so the principal adds up exactly to L.
  7. Totals over the term: interest = L × r × m + k × payment + balloon − L; total paid = L + interest.
  8. DSCR: the yearly net operating income ÷ (12 × the level payment). A monthly income entered on the page counts as 12 times that a year. It is shown only when the income is entered.
  9. Balloon due: with a start date, the first payment is one month after it and the balloon is due n months after it.

Assumptions

  • The rate is fixed for the whole term; interest is charged monthly at the yearly rate ÷ 12.
  • Payments are made at the end of each month.
  • Loan fees, reserves, escrow for taxes and insurance, and prepayment penalties are not included.
  • The DSCR uses the level payment, not the interest-only payment.
  • Values are not rounded to the cent between months; only the display is rounded.
  • The default rate and income are examples, not live figures.

Worked examples by hand

$1,500,000 with 25% down, 7%, a 25-year amortization, a 10-year term, and $140,000 of net operating income. The loan is 1,500,000 × 0.75 = $1,125,000 (75% loan-to-value). r = 0.07 ÷ 12 = 0.0058333 and A = 300, so (1 + r)^−300 = 0.174660 and the payment is 1,125,000 × 0.0058333 ÷ (1 − 0.174660) = $7,951.27. After k = 120 payments, (1 + r)^120 = 2.009661, so the balloon is 1,125,000 × 2.009661 − 7,951.266 × (2.009661 − 1) ÷ 0.0058333 = $884,625.71. Interest over the term is 120 × 7,951.266 + 884,625.71 − 1,125,000 = $713,777.63. A year of payments is $95,415.19, so the DSCR is 140,000 ÷ 95,415.19 = 1.47.

$2,000,000 with 30% down, 6.5%, a 30-year amortization, a 7-year term, and 2 interest-only years. The loan is $1,400,000. The interest-only payment is 1,400,000 × 0.065 ÷ 12 = $7,583.33 for 24 months. Then (1 + r)^−360 = 0.143025, so the payment is 1,400,000 × 0.0054167 ÷ (1 − 0.143025) = $8,848.95 for k = 60 months. (1 + r)^60 = 1.382817, so the balloon is 1,400,000 × 1.382817 − 8,848.952 × 0.382817 ÷ 0.0054167 = $1,310,553.68. Interest over the term is 182,000 + 60 × 8,848.952 + 1,310,553.68 − 1,400,000 = $623,490.82.

$800,000 with 20% down, 0%, a 20-year amortization, a 5-year term, and $60,000 of net operating income. The loan is $640,000, the payment is 640,000 ÷ 240 = $2,666.67, and 60 payments repay $160,000, so the balloon is $480,000. There is no interest. The DSCR is 60,000 ÷ 32,000 = 1.875.

Other questions people ask

How is a commercial mortgage payment calculated?

Like a home loan payment, but over the amortization period rather than the term: payment = L × r ÷ (1 − (1 + r)^−A), where L is the loan, r is the yearly rate ÷ 12, and A is the amortization period in months. A $1,125,000 loan at 7% amortized over 25 years costs $7,951.27 a month.

Why is there a balloon payment?

Commercial mortgages are usually figured over 20 to 30 years but fall due after 5, 7, or 10 years. The payments cover only part of the loan by then, so the rest is due at once as a balloon. Most owners refinance or sell to pay it. In the example above, $884,625.71 is still owed after 10 years.

What is the difference between the amortization period and the term?

The amortization period sets the size of each payment. The term is how long the loan runs before it must be repaid. When they are equal, the loan is fully repaid by its payments and there is no balloon.

What DSCR do lenders look for?

The debt service coverage ratio is the property’s net operating income divided by a year of loan payments. Many commercial lenders look for 1.20 to 1.25 or more, so the income covers the payments with room to spare. A ratio below 1 means the income does not cover the payments.

How does an interest-only period change the loan?

In the interest-only months you pay only the interest, L × r, so the balance does not fall. Here the level payment afterwards is still figured over the whole amortization period, which leaves a larger balloon than a loan with no interest-only months.

Is the example rate today’s commercial mortgage rate?

No. The page shows no live rates; the default is an example. Enter the rate a lender quotes you.