Amortization vs term
Amortization sets the payment; the term sets when the remaining balance is due. A loan amortizing over 25 years with a 10-year term has a balloon.
Commercial real estate loan calculator
Work out a commercial mortgage payment and the balloon due at maturity, then see how much a lender may lend by testing loan-to-value, debt service coverage and debt yield together.
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Commercial mortgage payment and balloon calculator
Commercial loans often amortize over a longer period than the loan term, so a balance is due when the term ends. Enter an interest-only period if the loan starts with one. The starting figures are hypothetical.
- Monthly payment
- $21,203
- $254,441 a year
- Balloon at maturity
- $2,359,002
- 78.6% of the original loan
- Interest over the term
- $1,903,407
- Principal repaid $640,998
Formula: Payment = loan × r × (1 + r)^n ÷ ((1 + r)^n − 1), where r is the monthly rate and n is amortization months. Balloon = loan balance after the amortizing payments made by the end of the term. An interest-only payment is loan × r; this calculator amortizes over the full amortization period once it ends.
Starting figures are hypothetical examples, except where a section names its source. Results are screening estimates, not appraisals, loan approvals or investment advice.
Maximum commercial loan calculator (DSCR, LTV and debt yield)
Lenders usually offer the smaller of two amounts: the loan the property's value supports and the loan its income supports. Enter the lender's limits from a term sheet; the defaults are hypothetical.
- Maximum loan
- $3,772,984
- Limited by DSCR
- Loan at the LTV limit
- $4,125,000
- DSCR at this loan: 1.14
- Loan at the DSCR limit
- $3,772,984
- LTV at this loan: 68.6%
- Debt yield
- 10.6%
- NOI ÷ maximum loan
Formula: LTV loan = value × maximum LTV. DSCR loan = the loan whose annual payment equals NOI ÷ minimum DSCR. Maximum loan = the smaller of the two. Debt yield = NOI ÷ loan.
Lenders set their own limits by property type, market and borrower. Use this to screen a deal before you request a term sheet.
How the default loan works out
Both calculators start from the same hypothetical property: $400,000 of NOI, a $5.5 million value and a 7% rate amortizing over 25 years.
Monthly payment
A $3,000,000 loan at 7% over 25 years costs $21,203 a month, or $254,441 a year.
Balloon
After 10 years of payments the balance is $2,359,002, about 79% of the original loan. That amount is due at maturity unless you refinance or sell. Total interest over the 10 years is about $1,903,407.
Value test
At 75% loan-to-value, the $5.5 million value supports a $4,125,000 loan. But that loan's payment would leave a DSCR of 1.14, under the 1.25 minimum.
Income test
NOI of $400,000 ÷ 1.25 = $320,000 of annual debt service. At 7% over 25 years that payment supports a $3,772,984 loan, 68.6% of value. The income test is lower, so it sets the maximum loan.
Debt yield
$400,000 ÷ $3,772,984 = 10.6%. Debt yield ignores rate and amortization, so lenders use it as a check that does not move when rates do.
Terms in a commercial loan quote
Loan-to-value (LTV)
Loan ÷ appraised value. Federal interagency guidelines for banks set supervisory LTV limits of 85% for improved property, 80% for commercial and multifamily construction, 75% for land development and 65% for raw land. Individual lenders often go lower.
Debt service coverage ratio (DSCR)
NOI ÷ annual principal and interest. A ratio of 1.25 means the property earns $1.25 for every $1 of loan payments.
Debt yield
NOI ÷ loan amount. It shows the lender's return on the loan from property income alone if it had to take the property back.
Interest-only period
Payments cover interest only, so the balance does not fall. Payments rise when amortization starts.
Frequently asked questions
QUICK ANSWERS
Use the standard amortization formula with the amortization period, not the loan term. A $3 million loan at 7% amortizing over 25 years is $21,203 a month, even if the term is only 10 years.
It is the balance still owed when the loan term ends. Because payments are based on a longer amortization, most of the principal can remain. In the default example, $2,359,002 of the $3 million is due after 10 years.
Lenders test both value and income and lend the smaller amount. In the default example, 75% LTV allows $4,125,000 but a 1.25 DSCR allows only $3,772,984, so the income test sets the limit.
It depends on the lender, property type and market. Ask lenders for their minimum; this calculator shows the debt yield of the maximum loan so you can compare.
No. Add origination fees, reserves and closing costs to your cash needs, and check the loan documents for prepayment terms such as yield maintenance or defeasance.
How we reviewed this
Federal LTV limits reviewed October 19, 2026. The worked example is hypothetical.