Calculate Commercial Mortgage
—
Monthly Payment
Total Interest Paid
—
Total Cost of Loan
—
Annual Debt Service
—
Formulas and default parameters verified against 2025 IRS/BLS data. Results are estimates for informational purposes only.
Advertisement
Commercial Mortgage Calculator
Calculate monthly payments, DSCR, and total costs for commercial real estate loans. Compare different loan terms and interest rates side by side.
How to Use This Calculator
- Enter the loan amount — The total mortgage you need for the commercial property.
- Enter the interest rate — Commercial mortgage rates are typically higher than residential (currently 6.5-9.5%).
- Select the loan term — Common commercial terms are 5, 7, 10, 15, 20, or 25 years. Note: many commercial loans have a balloon payment after 5-10 years.
- Enter the NOI (Net Operating Income) — Optional, but needed to calculate your Debt Service Coverage Ratio (DSCR).
- Click Calculate — See your monthly payment, total cost, DSCR, and amortization details.
What Is a Commercial Mortgage?
A commercial mortgage is a loan used to purchase, refinance, or develop commercial real estate — including office buildings, retail spaces, warehouses, multi-family properties (5+ units), and mixed-use buildings.
Unlike residential mortgages, commercial loans typically have:
- Shorter terms — 5-20 years vs. 30 years for residential
- Higher interest rates — 1-3% above residential rates
- Larger down payments — 20-35% vs. 3-20% for residential
- Balloon payments — Many commercial loans require a lump sum at the end
- DSCR requirements — Lenders typically require a DSCR of 1.25 or higher
What Is DSCR (Debt Service Coverage Ratio)?
DSCR measures whether a property's income can cover its debt payments. It's calculated as:
DSCR = Net Operating Income / Annual Debt Service
DSCR = NOI / (Monthly Payment × 12)
DSCR = NOI / (Monthly Payment × 12)
A DSCR of 1.0 means the property's income exactly covers the mortgage. Most lenders require at least 1.25x, meaning the property generates 25% more income than needed for the mortgage payment.
DSCR Guidelines
- Below 1.0 — The property doesn't generate enough income to cover the mortgage (negative cash flow)
- 1.0 - 1.24 — Barely covers the mortgage; most lenders will reject
- 1.25 - 1.49 — Acceptable for most lenders
- 1.50+ — Strong; preferred by lenders and indicates good cash flow buffer
Commercial Mortgage Rates in 2025
Commercial mortgage rates vary significantly based on property type, loan amount, and your financial profile:
- Multi-family (5+ units): 6.5% - 8.0%
- Office buildings: 7.0% - 9.5%
- Retail spaces: 7.0% - 9.0%
- Industrial/Warehouse: 6.5% - 8.5%
- SBA 504 loans: 5.5% - 7.0% (for owner-occupied)
Rates are typically 50-200 basis points above the 10-year Treasury yield. Your actual rate depends on your credit score, DSCR, loan-to-value ratio, and property type.
Commercial vs Residential Mortgages
- Down payment: Commercial requires 20-35% down vs. 3-20% for residential
- Loan term: Commercial 5-25 years vs. Residential 15-30 years
- Amortization: Commercial loans may have 25-30 year amortization with a balloon payment after 5-10 years
- Underwriting: Commercial focuses on property income (DSCR); residential focuses on borrower income (DTI)
- Prepayment: Commercial loans often have yield maintenance or defeasance penalties
Frequently Asked Questions
What is the minimum DSCR for a commercial mortgage?
Most commercial lenders require a minimum DSCR of 1.25x. Some SBA loans may accept 1.15x, while conventional lenders for strong properties may want 1.30x or higher. A higher DSCR gives you a better interest rate and more loan options.
What's the typical down payment for commercial real estate?
Most commercial lenders require 20-30% down. SBA 504 loans require only 10% down for owner-occupied properties. Hard money lenders may require 25-35% down. The exact amount depends on property type, your credit, and the lender's requirements.
What is a balloon payment?
A balloon payment is a large lump sum due at the end of a loan term. Many commercial mortgages are structured with a 25-30 year amortization but a 5-10 year term, meaning you make payments as if the loan is 25 years, but the remaining balance is due in full after 5-10 years. You'd then need to refinance or sell the property.
Can I get a commercial mortgage with bad credit?
It's more difficult but possible. Conventional lenders typically want a credit score of 680+. SBA loans may work with 650+. Hard money lenders focus more on the property value than your credit score, but they charge significantly higher rates (10-15%). DSCR-based lenders may approve loans primarily based on the property's income rather than your personal credit.
How is commercial mortgage interest calculated?
Commercial mortgages use the same amortization formula as residential loans: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments. Our calculator handles this automatically.