{
  "id": "commercial-mortgage",
  "version": "198752c98234",
  "status": "published",
  "name": "Commercial Mortgage Calculator",
  "question": "How much is a commercial mortgage?",
  "summary": "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.",
  "category": "finance",
  "subcategory": "mortgage-and-real-estate",
  "url": "https://www.acalculator.org/finance/commercial-mortgage-calculator",
  "markdown": "https://www.acalculator.org/finance/commercial-mortgage-calculator.md",
  "kind": "schedule",
  "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).",
  "assumptions": [
    "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."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "price": {
        "title": "Property price",
        "description": "The price or appraised value of the commercial property.",
        "type": "number",
        "x-unit": "USD",
        "exclusiveMinimum": 0,
        "maximum": 1000000000
      },
      "down": {
        "title": "Down payment",
        "description": "The part of the price you pay in cash, as a percent. The loan is the rest.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "exclusiveMaximum": 100
      },
      "rate": {
        "title": "Interest rate",
        "description": "The fixed yearly rate. The monthly rate is this ÷ 12.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 30
      },
      "amort": {
        "title": "Amortization period (years)",
        "description": "The number of years the payment is figured over, often 20, 25, or 30.",
        "type": "integer",
        "minimum": 1,
        "maximum": 40
      },
      "term": {
        "title": "Loan term (years)",
        "description": "The years until the loan is due; whatever is still owed then is paid as a balloon.",
        "type": "integer",
        "minimum": 1,
        "maximum": 40
      },
      "io": {
        "title": "Interest-only period (years)",
        "description": "Years at the start when you pay only the interest; 0 for none.",
        "type": "number",
        "minimum": 0,
        "maximum": 40
      },
      "noi": {
        "title": "Net operating income",
        "description": "The property’s yearly income after operating costs and before loan payments, for the debt service coverage ratio.",
        "type": "number",
        "x-unit": "USD",
        "x-period": "year",
        "minimum": 0,
        "maximum": 1000000000
      },
      "start": {
        "title": "Loan start date",
        "description": "The day the loan starts. The first payment is one month later.",
        "type": "string",
        "format": "date"
      }
    }
  },
  "outputs": {
    "payment": {
      "label": "Monthly payment",
      "description": "The level monthly principal and interest payment, figured over the amortization period.",
      "format": "money"
    },
    "ioPayment": {
      "label": "Interest-only payment",
      "description": "The monthly payment in the interest-only months, when there are any.",
      "format": "money"
    },
    "balloon": {
      "label": "Balloon at the end of the term",
      "description": "The balance still owed after the last regular payment, due with it.",
      "format": "money"
    },
    "loan": {
      "label": "Loan amount",
      "description": "The price minus the down payment.",
      "format": "money"
    },
    "ltv": {
      "label": "Loan-to-value",
      "description": "The loan as a percent of the property price.",
      "format": "percent"
    },
    "interest": {
      "label": "Interest over the term",
      "description": "All the interest paid until the balloon.",
      "format": "money"
    },
    "paid": {
      "label": "Total paid over the term",
      "description": "All the regular payments plus the balloon: the loan plus the interest.",
      "format": "money"
    },
    "dscr": {
      "label": "Debt service coverage ratio",
      "description": "The net operating income divided by a year of the level payments.",
      "format": "number"
    },
    "due": {
      "label": "Balloon due",
      "description": "The month the balloon is due, when a start date is given.",
      "format": "month-year"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "price": 1500000,
      "down": 25,
      "rate": 7,
      "amort": 25,
      "term": 10,
      "io": 0,
      "noi": 140000,
      "start": "2026-09-30"
    },
    "outputs": {
      "payment": 7951.265969344783,
      "balloon": 884625.70962571,
      "loan": 1125000,
      "ltv": 75,
      "interest": 713777.625947084,
      "paid": 1838777.625947084,
      "dscr": 1.4672715906682277,
      "due": "2036-09-30"
    },
    "text": "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."
  },
  "examples": [
    {
      "given": {
        "price": 1500000,
        "down": 25,
        "rate": 7,
        "amort": 25,
        "term": 10,
        "io": 0,
        "noi": 140000
      },
      "expect": {
        "loan": 1125000,
        "payment": 7951.26596934477,
        "balloon": 884625.7096257112,
        "interest": 713777.6259470852,
        "dscr": 1.46727159066823
      },
      "source": "hand calculation in content.mdx; Python 3 in docs/progress/WP-49/python/term_loans.py; 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"
    },
    {
      "given": {
        "price": 2000000,
        "down": 30,
        "rate": 6.5,
        "amort": 30,
        "term": 7,
        "io": 2
      },
      "expect": {
        "loan": 1400000,
        "ioPayment": 7583.333333333333,
        "payment": 8848.952328901514,
        "balloon": 1310553.6841818956,
        "interest": 623490.8239159856
      },
      "source": "hand calculation in content.mdx; Python 3 in docs/progress/WP-49/python/term_loans.py; 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"
    },
    {
      "given": {
        "price": 800000,
        "down": 20,
        "rate": 0,
        "amort": 20,
        "term": 5,
        "noi": 60000
      },
      "expect": {
        "loan": 640000,
        "payment": 2666.6666666666665,
        "balloon": 480000,
        "interest": 0,
        "dscr": 1.875
      },
      "source": "hand calculation in content.mdx: at 0% the payment is 640,000 ÷ 240 and 60 payments leave 480,000; 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"
    }
  ],
  "sources": [
    "Board of Governors of the Federal Reserve System, Commercial real estate lending (Commercial Bank Examination Manual, section 2100.1): amortization, balloon maturities, and debt service coverage. https://www.federalreserve.gov/publications/files/cbem.pdf",
    "Office of the Comptroller of the Currency, Comptroller’s Handbook, Commercial Real Estate Lending: debt service coverage and loan-to-value. https://www.occ.treas.gov/publications-and-resources/publications/comptrollers-handbook/files/commercial-real-estate-lending/index-commercial-real-estate-lending.html",
    "Amortized loan payment and outstanding balance formulas: S. A. Broverman, Mathematics of Investment and Credit, chapters 3 and 5."
  ],
  "related": [
    "dscr",
    "cap-rate",
    "commercial-loan",
    "rental-property"
  ],
  "changelog": []
}