Introduction
A commercial loan is money you borrow to buy a property used for business, such as an office building, retail store, or apartment complex. These loans work differently from home loans. They often have shorter terms, balloon payments, and higher interest rates. Before you sign, you need to know exactly what you will pay each month and how much the loan will cost you over time.
This commercial loan calculator helps you figure that out. Enter your property price, down payment, interest rate, and loan term to get a full breakdown of your costs. The calculator shows your monthly payment, balloon payment amount, total interest paid, true APR, loan-to-value ratio, and debt service coverage ratio (DSCR). It also builds a complete amortization schedule so you can see how each payment splits between principal and interest.
You can adjust the payment frequency, compounding method, origination fees, and prepayment penalties to match your actual loan terms. If you are comparing two different loan offers, turn on the side-by-side comparison tool to see which deal saves you more money. Use this calculator to plan ahead and make a smart borrowing decision.
How to Use Our Commercial Loan Calculator
Enter your loan details below to calculate your payment amount, balloon balance, total interest, real APR, equity, and debt service coverage ratio (DSCR). Here is what each field means.
Property Price ($): Type the full purchase price of the commercial property you plan to buy.
Down Payment ($): Enter the cash amount you will pay up front. The calculator subtracts this from the property price to find your loan amount.
Loan Amount: This field fills in on its own. It shows the property price minus your down payment, plus any rolled-in fees.
Annual Interest Rate (%): Enter the yearly interest rate your lender has quoted. Use the benchmark table below the inputs to compare your rate against typical commercial mortgage rates.
Amortization Term: Enter the full length of the repayment schedule. Use the Yr or Mo button to pick years or months.
Balloon Payment Due: Enter when the remaining balance comes due as a lump sum. This must be equal to or shorter than the amortization term. Use the Yr or Mo button to pick years or months.
Loan Start Date: Pick the date your loan begins. The calculator uses this to build real calendar dates in the amortization schedule.
Origination Fee: Enter the lender's origination fee. Click the % button to enter it as a percent of the loan amount, or click the $ button to enter a flat dollar amount.
Roll Origination Fee Into Loan: Choose Yes to add the origination fee to your financed loan balance. Choose No to pay it out of pocket at closing.
Documentation Fee ($): Enter any documentation or processing fee your lender charges.
Other Fees ($): Enter any other closing costs such as appraisal, legal, or title fees.
Payment Frequency: Choose how often you make payments. Options range from daily to annually. You can also pick Interest Only or In the End for a single lump-sum payment.
Compounding Frequency: Choose how often interest compounds. Monthly is the most common for commercial loans. Pick the method that matches your loan terms. If you want to explore how compounding affects growth over time, try the compound interest calculator.
Annual Property Appreciation Rate (%): Enter the rate you expect the property value to grow each year. The calculator uses this to project your equity and refinance LTV at the balloon date. Enter 0 to turn off this projection.
Annual Net Operating Income — NOI ($): Enter your yearly rental income minus operating expenses, before debt payments. The calculator uses this to compute your DSCR, which lenders use to judge if your property earns enough to cover the loan. You can also use our cap rate calculator to evaluate the property's return independent of financing.
Prepayment Penalty Type: Choose the type of early payoff penalty in your loan. Options are None, Percentage of Remaining Balance, Fixed Flat Fee, or Step-Down Schedule.
Prepayment Penalty Value: Enter the penalty amount. If you chose percentage, enter the percent. If you chose flat fee, enter the dollar amount. For step-down, enter the starting percent, which drops by 1% each year.
Compare Two Scenarios (A vs. B): Turn this on to enter a second set of loan details. The calculator will show a side-by-side table so you can see how the two options differ in payment, interest, equity, and more.
Click Calculate to see your results. Click Reset to return all fields to their default values. Use the View Amortization Schedule button to see a full payment-by-payment breakdown with dates.
What Is a Commercial Loan?
A commercial loan is money borrowed to buy property used for business. This includes office buildings, retail stores, apartment complexes, warehouses, and mixed-use spaces. Unlike a home mortgage, commercial loans usually have shorter terms, higher interest rates, and a large lump-sum payment at the end called a balloon payment.
How Commercial Loans Work
Most commercial loans are set up with two time frames. The first is the amortization term, which is the number of years used to calculate your monthly payment. The second is the balloon term, which is when the remaining balance comes due all at once. For example, a loan might use a 25-year amortization but require full payoff after just 5 years. At that point, borrowers typically refinance or sell the property.
Lenders charge fees on top of interest. An origination fee is a percentage of the loan amount paid to the lender for processing. There may also be documentation fees and other closing costs. These fees raise the true cost of borrowing above the stated interest rate. The APR (Annual Percentage Rate) shows your real rate after all fees are included.
Key Metrics Lenders Care About
Two numbers matter most when applying for a commercial loan. The first is LTV (Loan-to-Value ratio), which compares your loan amount to the property's value. A lower LTV means you are putting more money down, which lenders prefer. The second is DSCR (Debt Service Coverage Ratio), which compares the property's income to the loan payments. A DSCR above 1.25 means the property earns enough to cover the debt with room to spare. Most lenders require a DSCR of at least 1.20 to 1.25 before they approve a loan. You may also want to check your debt-to-income ratio if the loan involves a personal guarantee.
How to Use This Calculator
Enter the property price, your down payment, the interest rate, and the loan terms. The calculator will show your periodic payment, balloon amount, total interest, fees, APR, LTV, equity projection, and DSCR. You can also view a full amortization schedule and compare two loan scenarios side by side to find the better deal. If you are looking at government-backed options, try our SBA loan calculator for Small Business Administration loan estimates, or explore the business loan calculator for a broader range of financing scenarios.