Commercial Property Loan Calculator: Payment, Balloon and DSCR

Commercial Property Loan Calculator

Estimate a commercial real estate payment, balloon balance, cash at closing, LTV, DSCR, debt yield and amortization from the property and loan terms.

The period used to calculate the regular payment.
Enter the amortization period for a fully amortizing loan.
Income after operating expenses but before debt service and income tax.
Fees, underwriting target and display options

How the commercial property loan calculation works

The financed property amount is the purchase price minus the down payment. A cash-paid origination fee increases closing cash; a financed fee increases the loan balance. The regular payment is calculated over the amortization period, while the remaining balance becomes due at the shorter loan term.

Monthly payment: P × r × (1 + r)n ÷ [(1 + r)n − 1]. P is the financed balance, r is the monthly rate and n is the number of amortization payments. With a 0% rate, payment = P ÷ n.

The balloon is the balance remaining after the entered loan term. When the loan term equals the amortization period, the estimated balloon is zero apart from display rounding.

Commercial property metrics

DSCR = annual NOI ÷ annual principal-and-interest debt service.
Debt yield = annual NOI ÷ amount financed.
Cap rate = annual NOI ÷ property price.
LTV = amount financed ÷ property price.

NOI should be calculated before loan payments, depreciation, capital expenditures and income tax. Different lenders may adjust eligible income, vacancy, reserves and operating expenses. The target-DSCR result only reverses the payment formula under the entered assumptions; it does not apply lender LTV limits or underwriting adjustments.

Worked example

The example uses a US$1,000,000 property, 25% down, a 7.5% rate, 25-year amortization and a 10-year loan term. Annual NOI is US$90,000. The 1% origination fee is paid in cash with US$15,000 of other cash closing costs. Replace every value with the lender quote and a property-specific NOI.

A balloon is a refinancing risk, not a forecast. The balance is contractually due at maturity. Future rates, property value, NOI and credit conditions may be less favorable, and refinancing is not guaranteed.

Important limits

This is an educational planning estimate, not a loan offer, appraisal, underwriting decision, tax calculation or financial advice. It assumes a fixed nominal rate, equal monthly payments and no prepayments. It does not model daily interest, adjustable rates, interest-only periods, step payments, reserves, prepayment penalties, environmental review, guarantees, lender minimums, appraisal changes, capital expenditures, tenant rollover, lease structure, taxes, insurance, escrow, legal costs or income tax. Verify all terms and NOI adjustments with the lender and qualified property professionals.

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Frequently asked questions

Why can the loan term be shorter than the amortization?

Commercial real estate loans often calculate payments over a longer amortization period but mature sooner. The remaining principal is then due as a balloon payment.

Does NOI include the mortgage payment?

No. NOI measures property operations before financing. The calculator divides NOI by annual debt service to estimate DSCR.

Does a target DSCR guarantee the loan amount?

No. It is one screening calculation. A lender may use a different NOI, stress the interest rate, require reserves, cap LTV, apply minimum debt yield or decline the property or borrower for other reasons.