Commercial Mortgage Calculator
Commercial real estate loans are complex. Use our calculator to estimate total costs and compare different commercial mortgage offers.
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Calculating commercial mortgage costs can be tricky, especially if you’re trying to compare multiple business loan offers. Use our commercial real estate loan calculator to estimate monthly payments, interest costs, balloon payments and more.
How to use our commercial mortgage calculator
Step 1. Enter the loan details
Balloon payment. Select whether or not your loan has a balloon payment. Balloon payments are common with commercial mortgages. They allow you to make lower monthly payments during the loan term, but require a large lump sum at the end of the term to cover the remaining balance.
Property price. Enter the total cost of the commercial property you’re trying to buy or build. If you’re refinancing an existing property, put the remaining loan balance here instead.
Down payment. If you have to pay part of the loan upfront, enter it as a dollar amount here.
Interest rate. This is the yearly interest rate your lender charges you to borrow money. If you know the loan’s annual percentage rate (APR), use that here instead. If you're not sure, check out average commercial real estate loan rates for a quick estimate.
Loan term. This is how many years you’ll have to make payments for.
Amortization period (for balloon mortgages only). If your loan requires a balloon payment, enter the amortization period here. The amortization period should be longer than the loan term. Amortization periods for commercial balloon mortgages tend to range from 20 to 30 years, while loan terms typically last five to 10 years.
More about amortization
The amortization period is what the monthly payments are based off of. The loan term is the length that your loan lasts for. Because the amortization period is longer than the loan term, it allows for lower monthly payments. However, because the loan term ends before the amortization period, at the end of the term, you’ll have an outstanding amount that needs to be paid off all at once. This is the balloon payment.
Step 2. Calculate your results
Once you hit “calculate,” the tool will automatically generate results. Feel free to adjust the numbers to explore different loan scenarios and hit the “start over” button to reset the loan details.
» MORE: Business loan calculator
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
What is a commercial mortgage?
Commercial mortgages, also referred to as commercial real estate loans, help small-business owners fund expensive real estate projects, like buying a warehouse or building a new restaurant. They can also be used to refinance existing commercial mortgages.
Because commercial property is so expensive, these loans provide a means for small-business owners to expand their physical footprint while preserving cash flow for other business needs.
How do commercial mortgages work?
You receive a lump sum of money to buy or build the property and pay it back slowly over a set period of time, with interest. Commercial mortgages typically require a down payment of at least 20% of the cost of the property.
Like personal mortgages, commercial mortgages are usually self-secured by the property itself. This means that if you fail to pay back your loan, the lender may take over your property to recover its losses. They also often come with closing costs and other fees, and many have prepayment penalties, which are charged if you pay back your loan early or refinance it.
How do balloon payments work?
Many commercial real estate loans come with a balloon payment. This is a final principal payment that’s due at the end of your loan’s term.
Let’s say you have a commercial balloon mortgage with an amortization period of 25 years and a loan term of 10 years. You’ll make monthly payments as if you were paying it off over 25 years, even though the loan payments will stop after just 10 years.
These payments include both interest and principal. But because your loan ends after 10 years, you’ll have a large balance of unpaid principal due at the end. This is the balloon payment.
Because these final balloon payments are usually very large, this type of financing can be risky and is typically best-suited for small businesses with predictable future cash flows that can weather economic headwinds.
Some commercial balloon mortgages allow you to make interest-only payments during the loan term, with the entire principal due at the end.
Where can I get a commercial real estate loan?
You can find commercial real estate loans from banks and SBA and online lenders. The right lender for you depends on how fast you need funding, your qualifications and the type of loan you’re looking for. Check out NerdWallet’s list of best commercial real estate loans to get started.