Commercial Mortgage Calculator

How commercial mortgages differ

Residential loans amortize neatly to zero. Commercial loans typically pair a long amortization (20–25 years, which sets the payment) with a short term (5–10 years, when the remaining balance — the balloon — is due). On a $750,000 loan at 7.5% amortized over 25 years, the payment is about $5,542 a month, and after 10 years you still owe roughly $626,000, due in one refinancing, sale or payoff.

What commercial lenders actually underwrite

• DSCR — debt-service coverage ratio: property net operating income ÷ annual debt service. Most lenders want 1.20×–1.35×.
• LTV — 65–75% is typical (more conservative than residential), so down payments of 25–35% are normal.
• The property's income first, yours second — leases, vacancy history and tenant quality drive approval.
• Prepayment penalties — yield maintenance or step-down penalties are common and can be severe; read them before signing.
• Recourse — many commercial loans are personally guaranteed even when made to an LLC.

Planning the balloon

Your exit — refinance, sale, or cash payoff — should be planned from day one, because refinancing depends on future rates, property value and your DSCR at that time. Stress-test the loan at rates 2% higher and values 15% lower. For owner-occupied properties, also price an SBA 504 or 7(a) loan, which can offer longer fixed terms and lower down payments. Residential investors should use the standard payment calculator instead — 1–4 unit residential loans follow consumer rules, not commercial ones.