Commercial Mortgage Calculator — Payment, DSCR, Balloon & Loan Type Comparison 2026
You found a $2,000,000 office building generating $180,000/year in net operating income. Before you call a lender, you need to know three numbers: what the monthly payment looks like, whether that NOI actually supports the loan (DSCR), and what the balloon payment will be when the 7-year term ends. Most calculators give you one of these. This one gives you all three — plus a side-by-side comparison of Bank, SBA 504, CMBS, and Bridge loan options on the same property, and the maximum loan amount constrained by both LTV and DSCR simultaneously.
A commercial mortgage calculator estimates monthly P&I payments, calculates your Debt Service Coverage Ratio (DSCR) and Debt Yield, shows the balloon payment due at loan maturity, and compares all major commercial loan types on the same property in a single view.
Commercial Mortgage Calculator
Payment · Balloon · DSCR · LTV · Debt Yield · Max Loan — free, instant, no signup
| Loan Type | Rate | Monthly Pmt | Annual Cost | Best For |
|---|
What This Commercial Mortgage Calculator Shows
Monthly Payment (P&I)
This commercial mortgage calculator shows your exact monthly principal and interest payment based on your loan amount, rate, and amortisation period.
DSCR (Debt Service Coverage Ratio)
It calculates your DSCR instantly to show whether your property income supports the loan — and whether you meet lender requirements.
Balloon Payment
You can see the remaining balance due at the end of your loan term, helping you plan your refinance or exit strategy early.
Max Loan by LTV vs DSCR
The calculator shows your maximum loan amount based on both LTV and DSCR — and highlights which one limits your deal.
👉 Adjust your inputs above to see how each factor changes your loan approval instantly.
How to Use This Commercial Mortgage Calculator
Property Type
Select your property category: Office, Retail, Industrial, Multifamily, Mixed Use, or Other. Property type affects typical LTV limits and lender appetite:
| Property Type | Typical LTV | Lender Notes |
|---|---|---|
| Multifamily (5+ units) | 70–80% | Most lender options, most competitive rates |
| Industrial | 65–75% | Strong demand in 2026, good rates |
| Office | 60–70% | Tighter in 2026 due to remote work vacancy concerns |
| Retail | 60–70% | Varies heavily by tenancy (NNN vs. local) |
| Mixed Use | 65–75% | Depends on commercial vs. residential mix |
| Special Purpose | 50–65% | Gas stations, churches, auto — limited lenders |
Loan Type
The calculator compares four loan types simultaneously. Select your primary scenario — the comparison table shows all four on the same property.
Bank Loan (~7.25%): Traditional portfolio lender. Relationship-based pricing, flexible underwriting, best for stabilised assets with strong operating history. Terms typically 5–10 years, amortisation 20–25 years. Recourse to borrower.
SBA 504 (~6.25%): Government-backed, owner-occupied commercial real estate only. Lowest rates available, up to 90% financing, 10–25 year fully amortising terms (no balloon). The best option for business owners purchasing their operating premises. Not available for investment properties.
CMBS (~7.50%): Commercial Mortgage-Backed Securities loans are securitised and sold to bond investors. Fixed rate, non-recourse, typically $2M+ minimum. Strict cash management and reserve requirements. Prepayment via defeasance or yield maintenance — expensive to exit early. Best for stabilised, income-producing assets held long-term.
Bridge (~9.50%): Short-term financing (1–3 years) for value-add, transitional, or construction properties. Interest-only payments common. Used when the property can’t yet qualify for permanent financing due to occupancy or NOI history. Exit strategy is critical — refinance into permanent financing once stabilised.
→ Enter your property details above and use the Loan Type Comparison table to see exact payment differences across all four options on your specific numbers.
Loan Details
Property Value: Current appraised or purchase price. This drives your LTV calculation.
Down Payment %: Commercial down payments typically run 25–35%. A 30% down payment on a $2M property = $600,000 down, $1,400,000 loan, 70% LTV.
Amortisation Period: How long payments are calculated over — typically 20, 25, or 30 years. Longer amortisation = lower monthly payment but larger balloon.
Loan Term: When the balloon comes due — 3, 5, 7, or 10 years, or Full Amortisation (SBA 504, HUD). A 7-year term on a 25-year amortisation means you make 84 payments on a 25-year schedule, then owe the remaining balance.
Property Income — DSCR Check
Net Operating Income (NOI): Gross rental income minus all operating expenses (property taxes, insurance, maintenance, management fees, utilities) before debt service. This is your property’s income available to cover the mortgage.
Gross Annual Income + Vacancy Rate: The calculator derives effective gross income by applying your vacancy rate — a 5% vacancy on $240,000 gross = $228,000 effective income — giving a more accurate NOI if expenses are factored in.
Understanding Your Results
Monthly Payment (P&I)
Your principal and interest payment on the amortisation schedule. Note this does not include property taxes, insurance, or reserves — your actual total carrying cost will be higher. For a $1,400,000 loan at 7.25% on a 25-year amortisation: $10,119/month, $121,432/year in debt service.
DSCR — Debt Service Coverage Ratio
DSCR = Annual NOI ÷ Annual Debt Service
Example: $180,000 NOI ÷ $121,432 debt service = 1.48x
The DSCR tells a lender whether the property’s income comfortably covers the loan payment. The calculator shows your approval signal:
| DSCR | Signal | Lender Interpretation |
|---|---|---|
| 1.50x+ | Strong ✅ | Income well above minimum — favourable terms likely |
| 1.25–1.50x | Acceptable | Meets minimum — standard underwriting |
| 1.10–1.25x | Marginal ⚠️ | Below most lenders’ minimum — restructure required |
| Below 1.10x | Weak ❌ | Property income cannot support the loan |
Most conventional commercial lenders require a minimum DSCR of 1.25x. Some lenders accept 1.20x with compensating factors (strong borrower, lower LTV). SBA 504 typically requires 1.25x global (including all business and personal debt).
Why DSCR matters more than your credit score: A borrower with a 800 credit score cannot get a commercial loan approved if the property’s DSCR is 0.95x. The property must prove it can service its own debt.
Debt Yield
Debt Yield = Annual NOI ÷ Loan Amount × 100
Example: $180,000 ÷ $1,400,000 = 12.9%Debt yield is a lender’s backstop metric — independent of interest rate. It answers: “If we foreclose tomorrow, what return does the outstanding loan balance generate?” Most commercial lenders require a minimum debt yield of 8–9%. At 12.9%, the example property exceeds this comfortably.
Debt yield is particularly important for CMBS lenders and institutional underwriting. Most retail commercial calculators don’t show it — this one does.
LTV Ratio
Your loan balance as a percentage of property value. At $1,400,000 loan on $2,000,000 property: 70% LTV. The green checkmark indicates this falls within typical lender limits (65–75% for most commercial property types).
Max Loan Calculator — The Dual Constraint
This section shows what competitors miss: your maximum loan is constrained by whichever limit is lower — LTV or DSCR.
Max by LTV (75%): $1,500,000
Max by DSCR (1.25x): $1,660,195
Your Actual Max: $1,500,000 ← Constrained by LTV
In this example, the property’s income could support a $1,660,195 loan — but the LTV cap limits it to $1,500,000. In other scenarios, the DSCR limit may be the binding constraint. Understanding which limit constrains your deal tells you exactly where to focus: either increase the down payment (to address LTV) or increase NOI (to address DSCR).
→ Adjust the Down Payment % slider to see how each dollar of equity changes your LTV constraint vs. DSCR constraint.
Balloon Payment Due
The balloon payment is the remaining loan balance owed at the end of your loan term — not the end of the amortisation period.
$2,000,000 property, 30% down, $1,400,000 loan
25-year amortisation, 7-year term
Monthly payments for 84 months (7 years)
Principal paid: $181,061
Remaining balance at year 7: $1,218,939 — BALLOON DUE
This $1,218,939 is not a penalty or a fee — it is simply the outstanding balance, coming due because the 7-year term ended before the 25-year amortisation finished. Every commercial borrower needs an exit strategy for the balloon before it arrives.
Three balloon exit strategies:
- Refinance: Most common. Start the refinance process 12–18 months before maturity. If property values have dropped or rates have risen sharply, refinancing may be difficult or expensive — plan conservatively.
- Sell: If appreciation has built equity, selling before the balloon generates proceeds to pay it off. Factor in disposition costs.
- Reserve cash: For smaller balloons or cash-rich investors, holding reserves specifically for the balloon pay-off. Rare for large commercial loans.
Loan Type Comparison — 2026 Rates
The comparison table shows the same property financed under each available loan type:
| Loan Type | Rate | Monthly Pmt | Annual Cost | Best For |
|---|---|---|---|---|
| Bank Loan | 7.25% | $10,119/mo | $121,432/yr | Stable assets |
| SBA 504 | 6.25% | $9,235/mo | $110,824/yr | Owner-occupied |
| CMBS | 7.50% | $10,346/mo | $124,151/yr | $2M+ stabilised |
| Bridge | 9.50% | $12,232/mo | $146,781/yr | Value-add deals |
The SBA 504 saves $10,608/year versus a bank loan on this example — but only for owner-occupied properties. CMBS is non-recourse (significant protection) but the most restrictive in terms of prepayment and cash management. Bridge loans cost the most monthly but are the correct tool when the property doesn’t yet qualify for permanent financing.
Cap Rate vs DSCR — What Investors Should Know
What is Cap Rate
Cap rate (capitalization rate) measures your property’s return based on its income:
Cap Rate = NOI ÷ Property Value
Example: $180,000 NOI ÷ $2,000,000 = 9% cap rate
How Cap Rate Differs from DSCR
- Cap rate measures investment return
- DSCR measures loan affordability
A property can have a strong cap rate but still fail DSCR requirements if the loan is too large.
Why Both Matter
Lenders focus on DSCR, while investors focus on cap rate. A strong deal satisfies both.
👉 Compare your NOI and loan amount above to see how DSCR changes even when cap rate stays the same.
Commercial Loan Types — When to Use Each
Bank Loan — The Relationship Loan
Traditional bank loans remain the most common commercial financing for properties under $5M. Pricing is relationship-based — an existing banking relationship can mean 25–50 basis points better rate. Recourse to borrower (your personal assets are collateral). Flexible on underwriting quirks, willing to consider business cash flow alongside property NOI.
Best candidates: Experienced borrowers with banking relationships, stabilised income-producing properties, refinances of existing relationships.
SBA 504 — Owner-Occupied Only, Best Rates
The SBA 504 program provides below-market fixed-rate financing for owner-occupied commercial real estate. Up to 90% financing (10% down versus 25–30% conventional), fully amortising (no balloon), 10–25 year terms. Rates are set monthly by the SBA based on Treasury yields.
Key restriction: At least 51% of the property must be occupied by the borrowing business. You cannot use SBA 504 for investment properties. A dentist buying a medical office building qualifies. An investor buying the same building to lease to a dentist does not.
CMBS — Non-Recourse, Institutional Scale
Commercial Mortgage-Backed Securities loans are originated by banks or conduit lenders and sold into securitised bond pools. The loan becomes non-recourse once securitised — meaning lender’s recourse in default is limited to the property, not the borrower’s personal assets. Minimum loan sizes typically $2M–$5M.
The critical trade-off: CMBS loans carry strict cash management requirements and are extremely expensive to exit early. Defeasance (replacing loan collateral with Treasury securities) or yield maintenance can cost several percent of the loan balance if you need to sell or refinance before maturity. Only consider CMBS if you’re confident in a full-term hold.
Bridge Loan — Value-Add and Transitional
Bridge loans fill the gap between acquisition and permanent financing. If you’re buying a building that is 60% occupied and plan to lease it up to 92%, a bank lender won’t finance it today — the NOI doesn’t support a permanent loan. A bridge lender will, at higher rates and shorter terms, with the plan to refinance into permanent financing once the property is stabilised.
Bridge loans are almost always interest-only, which reduces the monthly payment but means zero principal paydown during the term. Exit strategy is critical — bridge lenders underwrite assuming you will refinance or sell at term.
Commercial Mortgage Rates (2026)
Average Rates by Loan Type
As of 2026, commercial mortgage rates typically range:
- Bank loans: 6.0% – 8.0%
- SBA 504: 5.5% – 7.0%
- CMBS: 6.0% – 8.5%
- Bridge loans: 8.0% – 12.0%
What Affects Your Rate
Your final interest rate depends on:
- Loan-to-Value (LTV)
- Debt Service Coverage Ratio (DSCR)
- Property type and location
- Credit score and borrower strength
- Market conditions
Lower LTV and higher DSCR typically result in better rates.
👉 Use the calculator above to see how small rate changes impact your monthly payment and DSCR.
How to Choose the Right Commercial Mortgage Lender
Bank vs SBA vs CMBS
- Banks: Flexible, relationship-based
- SBA: Best rates for owner-occupied properties
- CMBS: Non-recourse but strict terms
When to Use a Broker
A commercial mortgage broker can help you:
- Access multiple lenders
- Compare loan structures
- Structure deals to meet DSCR requirements
What Lenders Evaluate
Before approving your loan, lenders look at:
- DSCR (minimum ~1.25x)
- LTV (typically 65–75%)
- Property income stability
- Borrower experience and credit
👉 Use the calculator above to test whether your deal meets lender thresholds before applying.
How Commercial Mortgages Differ from Residential Loans
Commercial mortgage underwriting works on fundamentally different logic than home loans. Residential lenders evaluate the borrower’s income and creditworthiness. Commercial lenders evaluate the property’s income-generating ability — and the borrower’s financial strength is secondary.
Three differences matter most before you use this calculator:
Amortization ≠ Loan Term. A residential 30-year mortgage runs for 30 years. Most commercial mortgages amortize over 20–25 years but have a loan term of 5, 7, or 10 years. When the term ends, the remaining balance — the balloon payment — comes due in full. You either refinance, sell, or pay it off.
NOI drives the deal. Your Net Operating Income (gross rental income minus all operating expenses, before debt service) is what lenders use to determine how much they’ll lend. If the NOI doesn’t support the payment at a 1.25x DSCR minimum, the loan doesn’t happen — regardless of your credit score.
LTV is lower than residential. Most commercial lenders cap loans at 65–75% LTV, versus 80–97% on residential. You need real equity in the deal. The maximum loan is constrained by whichever is lower: the LTV limit or the DSCR limit.
Frequently Asked Questions
What is DSCR and what is the minimum required?
DSCR (Debt Service Coverage Ratio) is your annual Net Operating Income divided by your annual debt service. A DSCR of 1.25x means the property generates 25% more income than needed to cover the loan payment — the standard minimum for most commercial lenders. A DSCR below 1.0 means the property loses money after debt service. The calculator shows your DSCR with an approval signal (Strong/Acceptable/Marginal/Weak) based on current lender thresholds.
What is a balloon payment on a commercial mortgage?
A balloon payment is the outstanding loan balance owed when the loan term ends — before the loan is fully amortised. Example: a $1,400,000 loan on a 25-year amortisation schedule with a 7-year term generates approximately $1,218,939 in remaining balance after 7 years of payments. This full amount is due at maturity. Most borrowers refinance or sell the property to satisfy the balloon. Begin planning your exit strategy 12–18 months before the balloon date.
How much down payment is required for a commercial mortgage?
Most conventional commercial lenders require 25–35% down (65–75% LTV). SBA 504 loans allow 10% down for owner-occupied properties. The actual required down payment depends on property type, borrower strength, and DSCR — if the property income barely supports a loan at 65% LTV, a lender may require 40%+ down to improve the DSCR. Use the Max Loan Calculator section to find your actual maximum loan under both LTV and DSCR constraints simultaneously.
What commercial mortgage rates can I expect in 2026?
As of 2026, typical commercial mortgage rates by loan type: Bank loans 6.0–8.0%, SBA 504 5.5–7.0%, CMBS 6.0–8.5%, Bridge loans 8.0–12.0%. Rates are influenced by property type (multifamily gets the best rates), LTV (lower leverage = better rate), DSCR (higher coverage = better rate), borrower credit and net worth, and the specific loan program. Use the Loan Type Comparison table to see how current rate differences translate to dollar payment differences on your specific loan amount.
What is Debt Yield and why does it matter?
Debt yield is Net Operating Income divided by the loan amount, expressed as a percentage. Example: $180,000 NOI ÷ $1,400,000 loan = 12.9%. Lenders — particularly CMBS and institutional lenders — use debt yield as a stress-test metric independent of interest rates. Most require a minimum debt yield of 8–10%. At 12.9%, a property has a healthy cushion. Debt yield is rarely shown in consumer commercial mortgage calculators; it’s included here because it directly affects whether institutional lenders will approve your loan.
What is the difference between amortisation period and loan term?
The amortisation period (20, 25, or 30 years) determines how your monthly payment is calculated — as if the loan would run for that full period. The loan term (3, 5, 7, or 10 years) is when the loan actually matures. With a 25-year amortisation and 7-year term, you pay 84 monthly payments based on the 25-year schedule, then the remaining balance (the balloon) comes due. SBA 504 and HUD/FHA loans are fully amortising — term equals amortisation period, no balloon.
Can I get a commercial mortgage with no money down?
Rarely. SBA 504 allows 10% down for owner-occupied properties. Some SBA 7(a) loans can finance higher percentages for certain business types. Conventional commercial lending at 0% down is essentially unavailable — lenders require equity in the deal. If you’re short on down payment, consider a partnership structure, seller financing for part of the equity, or building a stronger track record before purchasing.
Data source:
Federal Reserve H.8 commercial real estate loan data, SBA.gov 504 program rates (2026), FDIC commercial real estate lending guidelines
Disclaimer: Estimates only. Commercial mortgage terms, rates, and approval depend on lender,underwriting, property performance, and borrower qualifications. Consult a licensed commercial mortgage broker for your specific transaction.
Related Calculators
For residential investment property financing — 1–4 unit properties, which use different underwriting standards — see the Mortgage Calculator which models standard residential payments including PMI and escrow.
For rental property return analysis alongside your commercial mortgage payment, the Rental Yield Calculator calculates gross yield, net yield, cap rate, and cash-on-cash return based on your actual financing costs. If you’re evaluating the HELOC or equity position on an existing commercial property you own, the HELOC Calculator estimates available credit based on current value and outstanding balance.
For property tax cost by state and county — which directly affects your NOI calculation — use the Property Tax Calculator. Commercial property buyers who are also evaluating residential purchase options can compare total cost structures using the Closing Costs Calculator.