A commercial mortgage sizes the payment on one schedule and comes due on a shorter one. Enter the loan, rate, amortization, and term, and the calculator returns the monthly payment, the balloon you still owe when the term ends, total interest through the term, and the full amortization schedule. Add a purchase price to see loan-to-value.
Principal and interest only. Taxes, insurance, and reserves are on top.
| Year | Principal | Interest | Balance |
|---|
A home loan collapses them into one. A commercial loan keeps them apart.
Amortization is the schedule used to size the payment. Term is how long the loan contract runs before the balance is due. On a 30-year mortgage they are the same number. On a commercial loan they almost never are: most stabilized deals pair a 5, 7, or 10-year term with a 20 to 25-year amortization, which lenders shorthand as a "10/25". Our guide to commercial real estate loan terms goes deeper.
The gap is where the money is. Take $1,000,000 at 7.25% on a 25-year amortization: the payment is about $7,228 a month, and that long schedule is what keeps the deal cash-flowing. Put a 10-year term on it and you make that payment for a decade and still owe roughly $791,800, because 25-year amortization has barely touched principal by year 10. That remaining balance is the balloon. Shorten the amortization and the payment rises while the balloon shrinks; lengthen it and the reverse happens. The calculator lets you move both and watch the trade.
The whole remaining balance, due in one lump sum when the term ends.
You clear a balloon one of three ways: refinance into a new loan, sell the property, or pay it from other capital. Refinancing is the usual outcome, which means your exit depends on the rates and lending standards in force on that future date rather than today's.
The refinance is a fresh underwriting. The lender looks again at the property's cash flow, the loan-to-value at that point, and your personal balance sheet. The cushion you can show at that moment, in coverage and in liquidity, is what keeps a balloon from turning into a scramble. Our write-up on commercial real estate loan qualifications lists what they ask for.
Two structures skip the balloon. An SBA 7(a) real estate loan fully amortizes over up to 25 years, and the SBA 504 CDC debenture fully amortizes over 10, 20, or 25 years. For an owner-occupant planning to keep the building, that removes the refinance risk that defines most commercial debt. Model both in the SBA loan calculator.
The same building gets different terms depending on who lends. Ranges are typical, not universal.
| Lender type | Typical term | Amortization | Typical max LTV |
|---|---|---|---|
| Conventional bank | 5 to 10 years, balloon | 20 to 25 years | 65% to 75% |
| Credit union | 5 to 10 years, often balloon | 20 to 25 years | 65% to 75% |
| Agency or life company | 5 to 25 years | 25 to 30 years | 55% to 70% |
| CMBS conduit | 5, 7, or 10 years, balloon | 25 to 30 years | 65% to 75% |
| SBA 504, owner-occupied | CDC debenture 10, 20, or 25 years | Fully amortizing, no balloon | About 90% (10% down) |
SBA 504 is the owner-occupied alternative that trades the balloon for a fixed, fully amortizing debenture. The types of commercial real estate loans guide covers the rest of the field.
Commercial lenders qualify the property and you at the same time.
The loan divided by the appraised value. Banks and CMBS lenders usually cap it at 65% to 75%, so plan on 25% to 35% equity. Enter a purchase price above to see your LTV and implied down payment. Ground-up projects are sized on loan-to-cost instead.
Whether the property's net operating income covers this payment with room to spare. Most banks want 1.20x to 1.25x. Take the payment from this page into the DSCR calculator.
On a recourse loan, which means most bank loans and every SBA loan, the lender underwrites your personal balance sheet next to the property's, with net worth and post-closing liquidity weighted heavily. Expect to hand over a personal financial statement before a term sheet.
The assets, liabilities, and liquidity that shape the approval are what the lender's personal financial statement asks for, and they ask again at every balloon refinance. StatementsReady builds that statement from synced balances in about 8 minutes and rolls it forward next year. Garrett Pierson is the founder of StatementsReady and a licensed commercial real estate agent in Utah. He owns commercial property himself, so he fills out the same lender paperwork he writes about.
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