CRE loans separate two time frames: the amortization period, which sets the monthly payment, and the loan term, which is when the balloon payment is due. Monthly payments are calculated as if the loan runs the full amortization period, but at the end of the shorter term you must pay the remaining balance. Use the Cap Rate Calculator to verify a property's yield before modeling the debt structure.
Balloon = remaining principal after loan term months
$2M at 7.0%, 25yr amort, 10yr term: $14,126/mo, ~$1.62M balloon
Commercial Real Estate Loan Down Payment Requirements
Down payment requirements vary by property type, loan program, and borrower profile. Investment properties require more equity than owner-occupied. The table below reflects typical bank and insurance company lender minimums as of 2026.
Property Type
Max LTV
Min Down Payment
Multifamily (5+ units)
80%
20%
Industrial / Warehouse
75%
25%
Office (stabilized)
70%
30%
Retail (anchored)
70%
30%
Hotel / Hospitality
65%
35%
SBA 504 (owner-occupied)
90%
10%
Types of Commercial Real Estate Loans
Each loan type targets a different situation. Permanent loans are for stabilized, income-producing properties. Bridge loans cover transitions. Construction loans fund new builds. Use the Commercial Mortgage Calculator to model standard permanent loan scenarios.
Loan Type
Term
Max LTV
Best For
Permanent / Conventional
5-10 yr term, 25-30 yr amort
75%
Stabilized income properties
Bridge Loan
6-36 months
70%
Renovation, lease-up, repositioning
Construction Loan
12-36 months
70%
Ground-up development
SBA 504
20-25 years
90%
Owner-occupied only
CMBS Loan
10 years fixed
75%
Non-recourse, large assets
Hard Money
12-24 months
65%
Fast close, distressed assets
Commercial Real Estate Loan Requirements
Lenders underwrite both the borrower and the property. The property must generate enough income to service the debt. The borrower must show creditworthiness and liquidity. Use the DSCR Loan Calculator to verify your property meets the debt service coverage threshold before applying.
DSCR
Minimum 1.20x to 1.25x. Property NOI divided by annual debt service. A DSCR below 1.0 means the property cannot cover its own loan payments.
LTV
Maximum 65 to 80 percent depending on property type. Higher LTV means more risk for the lender and typically a higher interest rate.
Credit Score
Most banks require a minimum 680 personal credit score. Life companies and CMBS lenders may require 700 or above. Hard money lenders are more flexible.
Net Worth
Many lenders require the borrower's net worth to equal or exceed the loan amount. This demonstrates financial depth beyond the property itself.
Liquidity / Reserves
6 to 12 months of debt service in liquid reserves, typically in bank or brokerage accounts. Some lenders require this in escrow at closing.
Operating History
2 years of property operating statements for investment properties. New construction requires a detailed pro forma with market rent comparables.
Example Calculation
You are financing a $2.5M office building with a $2M loan at 7.0 percent interest, amortized over 25 years with a 10-year balloon. Before applying, verify the property meets DSCR requirements with the DSCR Loan Calculator.
Loan: $2,000,000 at 7.0%
Amortization: 25 years (300 months)
Monthly payment: $14,126
After 10 years: $1,623,000 balloon due
You must refinance or sell before year 10.
Common Mistakes to Avoid
Treating the loan term as the amortization period
A 10-year term does not mean 10-year amortization. The monthly payment is based on 25-year amortization. At year 10, you owe the balloon, typically 75 to 85 percent of the original loan amount.
Not planning for the balloon refinance
Interest rates at your balloon maturity may be much higher or lower than today. Plan your refinancing 12 to 18 months before the balloon is due, not after it hits.
Using this calculator for IO (interest-only) loans
Interest-only CRE loans have lower monthly payments but the full principal is due at maturity. This calculator assumes fully amortizing payments. For IO loans, the monthly payment is simply principal multiplied by the monthly rate.
Forgetting closing costs in your cash-to-close calculation
CRE loan closing costs including origination, appraisal, environmental, and legal fees typically add 1 to 3 percent of the loan amount. A $2M loan can have $40,000 to $60,000 in upfront closing costs on top of your down payment.
Setting term longer than planned hold period
If you plan to sell in 5 years but take a 10-year balloon loan, prepayment penalties may apply when you sell. Always check the prepayment schedule in the loan documents before committing to a term.
Frequently Asked Questions
Most CRE loans have a 5, 7, or 10-year term with a balloon payment, while amortization runs 20 to 30 years. A common structure is 25-year amortization with a 10-year term. Monthly payments are calculated as if the loan runs 25 years, but the remaining balance is due at year 10, typically 75 to 85 percent of the original loan amount.
Reference for standard CRE loan structures, amortization vs term definitions, balloon payment mechanics, and typical LTV requirements by property type.
Overview of CRE loan types, amortization structures, DSCR requirements, and down payment ranges for different commercial property categories.
HR
Hassaan Rasheed
Developer and Researcher, CalculatorFlux
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.
Last updated: May 2026
Typical CRE Loan Terms
Metric
Typical Range
LTV
65-80%
Amortization
20-30 years
Loan term
5-10 years
DSCR required
1.20-1.30x
Rate (2026)
6.5-9.5%
Origination fee
0.5-2%
Pro Tip
Match your loan term to your planned hold period. If you plan to sell in 7 years, use a 7-year term to avoid prepayment penalties. If you want to hold long-term, negotiate for a 10-year term to reduce refinancing risk.
