Commercial Mortgage Calculator: How Lenders Size Payments (2026)
Payment formula, balloon payment calculation, DSCR approval thresholds, and rate comparison vs residential.
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Commercial mortgage payments use standard amortization: each payment covers the monthly interest due plus a portion of the principal. The interest share is highest at the start and shrinks over time as the balance falls. The formula is identical to residential mortgages; what differs is the typical term structure, rate, and underwriting criteria.
The monthly payment calculated here is principal and interest only. To determine whether the property income actually covers the loan, use the DSCR Loan Calculator, which tells you whether your NOI meets the lender's minimum debt service coverage ratio.
You are buying a $1,250,000 retail building. You put 20% down ($250,000), borrowing $1,000,000 at 7.25% amortized over 25 years.
If this property generates $96,000/year in NOI ($8,000/month), your annual debt service is $86,760, giving a DSCR of 1.11. Most lenders require 1.25 DSCR, so you would need higher NOI or a lower purchase price. To model the property return before adding debt, run the Cap Rate Calculator first to confirm the NOI justifies the purchase price at current market cap rates.
Most commercial lenders offer amortization periods of 15, 20, 25, or 30 years. The choice has a significant impact on both monthly payment and total interest paid. On a $1,000,000 loan at 7.25%:
| Term | Monthly Payment | Total Interest | vs 25-Year |
|---|---|---|---|
| 15 years | $9,122/mo | $641,000 | Save $528,000 |
| 20 years | $7,846/mo | $883,000 | Save $286,000 |
| 25 years | $7,230/mo | $1,169,000 | Baseline |
| 30 years | $6,824/mo | $1,456,000 | +$287,000 more |
A longer amortization lowers your monthly payment and improves cash flow, but you pay significantly more interest over the life of the loan. Most investment property lenders cap amortization at 25 years. Owner-occupied SBA 504 loans can go to 25 years on real estate.
Remember that commercial loans often have balloon payments: you may amortize over 25 years but owe the full remaining balance after a 7 or 10-year term. For a complete investment return analysis that accounts for hold period, exit, and cash flows, the IRR Calculator puts the total picture in perspective.
Researches and verifies the formulas, methodology, and source data behind each calculator on CalculatorFlux. All tools are built and checked against the cited references before publication.
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