Commercial Mortgage Calculator: Payment on Office, Retail, or Industrial Property
Work out the monthly payment and total interest on a commercial mortgage — the financing structure behind office, retail, industrial, and multifamily real estate.
Adjust the inputs and select Calculate for a full breakdown.
Year-by-year amortization schedule
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Monthly payment | Total interest | Total of payments |
|---|---|---|---|
| $1M · 7% · 20-year | $7,752.99 | $860,717.45 | $1,860,717.45 |
| $500k · 8% · 25-year | $3,859.08 | $657,724.33 | $1,157,724.33 |
| $5M · 6.5% · 30-year (multifamily) | $31,603.40 | $6,377,224.42 | $11,377,224.42 |
| $250k · 8.5% · 15-year | $2,461.85 | $193,132.80 | $443,132.80 |
How This Calculator Works
Enter the loan amount, the APR, and the amortization term. The calculator turns the APR into one constant monthly payment using the amortization formula and shows total interest paid. Commercial loans often amortize over 20 to 25 years with a balloon at year 5 or 10 — set the term to match the amortization, and remember the balloon when planning refinancing.
The Formula
Fixed-Rate Amortization
P = loan amount, r = monthly rate (APR ÷ 12), n = number of monthly payments
Worked Example
A $1,000,000 commercial mortgage at 7% APR over 20-year amortization gives a monthly payment of about $7,753. Total payments come to roughly $1,861,000 over the full term — interest adds about $861,000. On a 5-year balloon with the same 20-year amortization, the balance at year 5 is what you'll need to refinance.
Key Insight
Commercial mortgages diverge from residential in three ways: shorter balloon term despite long amortization, recourse vs non-recourse structure, and rate tied to property cash flow rather than borrower W-2 income. The DSCR (debt service coverage ratio) the lender demands — typically 1.20x to 1.35x — sets the maximum loan they will originate, often binding before LTV does. Pro forma the property's NOI conservatively when running the numbers.
Why commercial mortgages have balloon terms
Most commercial mortgages have 5, 7, or 10-year terms with 25 or 30-year amortization, ending with a balloon payment for remaining principal. The balloon structure forces borrower to refinance or pay off the loan at term end. This differs from residential 30-year fully-amortizing structures.
Reasons for balloon structure: (1) LENDER RATE RISK — lenders avoid 30-year rate commitments because rates may rise significantly over decades; 5-7 year repricing aligns with their funding terms. (2) UNDERWRITING REASSESSMENT — at term end, the lender re-underwrites the loan based on current property performance, allowing risk adjustment. (3) BORROWER FLEXIBILITY — borrowers can refinance, sell, or restructure at term end.
Risk: refinancing risk. Borrowers must qualify for refinance at term end. If property NOI has declined or rates have risen substantially, refinance may not be possible at attractive terms. The 'maturity wall' for commercial mortgages 2024-2027 — substantial loans originated 2014-2017 at low rates are coming due at much higher refinance rates. Office sector facing particular distress as property values may not support refinancing at higher rates.
Recourse vs non-recourse — and the carve-outs
Commercial mortgages are typically NON-RECOURSE — lender's only remedy on default is foreclosing on the property. Borrower's personal assets are protected. This structure shifts default risk to lender and supports limited-liability investing in commercial real estate.
But 'non-recourse' loans typically have CARVE-OUTS — actions by borrower that trigger personal liability. Standard carve-outs: fraud or material misrepresentation; gross negligence; environmental contamination; voluntary bankruptcy (springing recourse); failure to maintain SPE (special purpose entity) status; failure to insurance / pay taxes / maintain property.
The 'bad-boy guarantee' is the legal instrument enforcing carve-outs. Borrower (typically a guarantor LLC owner) signs personal guarantee for losses arising from prohibited actions. In normal operating, the loan is non-recourse. If borrower commits a carve-out act, personal liability springs. For investors, understanding which actions trigger springing recourse is essential — even seemingly innocuous decisions (transferring property to a new entity without lender consent) can trigger personal liability.
Commercial mortgage typical terms by property type (2024)
Reference commercial mortgage terms by property type. Rates fluctuate with Treasury and SOFR rates.
| Property type | Typical rate (5-yr term) | LTV max | DSCR min |
|---|---|---|---|
| Multifamily (Class A) | 6.0-7.0% | 65-75% | 1.20-1.25× |
| Multifamily (Class B/C) | 6.5-7.5% | 60-70% | 1.25-1.30× |
| Industrial / logistics | 6.0-7.0% | 65-75% | 1.20× |
| Retail (grocery-anchored) | 6.5-7.5% | 60-70% | 1.25× |
| Office (CBD class A) | 7.0-8.5% | 55-65% | 1.30-1.40× |
| Office (suburban / older) | 8.0-10%+ | 50-60% | 1.40×+ |
| Hotels (full-service) | 7.5-9.0% | 55-65% | 1.35× |
| Self-storage | 6.5-7.5% | 65-75% | 1.20× |
| Healthcare (medical office) | 6.5-7.5% | 60-70% | 1.25× |
Commercial mortgage rates rose 200-300 basis points from 2021 to 2024 as Treasury and SOFR rose. Office sector saw particular rate increases and underwriting tightening due to work-from-home effects on property values and occupancy. Hotel and self-storage have held better. For multifamily and industrial, market remained relatively functional throughout.
Frequently Asked Questions
How is a commercial mortgage different from residential?
Commercial mortgages typically require 25%+ down, run shorter balloon terms (5 to 10 years) with longer amortization (20 to 25 years), and are underwritten primarily on the property's cash flow (DSCR) rather than the borrower's W-2 income.
What is DSCR?
Debt service coverage ratio — annual NOI divided by annual debt service. Commercial lenders typically require 1.20x to 1.35x, meaning NOI must cover debt service by 20% to 35%. DSCR often caps loan size before LTV does.
What is a balloon payment?
The remaining principal balance due at the end of the term, even though the loan amortizes over a longer period. A 25-year amortization with 5-year balloon means you pay as if the loan were 25 years but owe the full remaining balance at year 5 — either refinance or pay off.
Are commercial loans recourse or non-recourse?
Both exist. Recourse holds the borrower personally liable beyond the property; non-recourse limits the lender to the property itself. CMBS loans are typically non-recourse with carve-outs; local bank commercial loans usually recourse.
What rate spread over Treasuries is typical?
Commercial mortgages commonly price at 10-year Treasury plus 2.0% to 3.5% spread. The spread varies by property type, leverage, and borrower strength. Multifamily and Class A office typically narrowest; retail and hotels widest.
When is this calculator unreliable?
When ignoring balloon-payment structure (commercial mortgages typically refinance at 5-10 year term end — balloon payment due if refinance unsuccessful), when not accounting for prepayment penalties (defeasance or yield maintenance can be 5-15% of remaining principal), or when missing recourse carve-outs (seemingly innocuous actions can trigger personal liability under non-recourse structures).
References & Authoritative Sources
- Mortgage Bankers Association (MBA) — Commercial / Multifamily Origination Index — Commercial Mortgage Market Statistics · consulted June 1, 2026 · Industry data on U.S. commercial mortgage origination
- Trepp — CMBS Research — Commercial Mortgage Market Reports · consulted June 1, 2026 · Industry source for CMBS market data
- CBRE Capital Markets — Annual Commercial Mortgage Survey · consulted June 1, 2026 · Industry benchmark for CRE lending terms
Related Calculators
Data Sources & Benchmarks
This calculator draws on 2 independent, dated sources.
Methodology & Review
Commercial mortgage payment uses standard loan amortization formula on loan amount, interest rate, and amortization period. The calculator returns monthly P+I payment. Commercial mortgages differ from residential: typically 25-year amortization but 5-10 year term with balloon (full payoff or refinance at term end); recourse vs non-recourse structures; debt service coverage ratio (DSCR) and debt yield as primary underwriting; floating rate options on construction and bridge loans common. RELIABILITY: Reliable for amortization calculation. Less reliable as a complete commercial mortgage cost picture — actual commercial loans include origination fees (1-2% typical), prepayment penalties (defeasance or yield maintenance), reserve requirements, and rate adjustments at balloon. Total cost is materially different from monthly P+I alone.
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