Commercial Loan Payment Calculator
Estimate monthly payments, annual debt service, and total interest on commercial real estate loans.
Use this free calculator from CapitalAx Commercial Lending to analyze your commercial financing scenario. For personalized guidance on your specific deal, request a quote or call our team.
How Commercial Loan Payments Are Calculated
Commercial loan payments follow the same amortization math as any installment loan. The monthly payment spreads the principal and interest evenly over the amortization period, with early payments weighted toward interest and later payments weighted toward principal. Three inputs drive the number: the loan amount, the interest rate, and the amortization period in years.
Monthly Payment = P × r × (1 + r)^n / ((1 + r)^n - 1)
P = loan amount, r = monthly rate, n = number of monthly payments
Worked Example
A borrower takes a $1,000,000 commercial loan at 7.5 percent with a 25-year amortization. The monthly rate is 0.625 percent and the schedule runs 300 months. That produces a monthly payment of roughly $7,390, annual debt service of roughly $88,680, and total interest of roughly $1,217,000 over the full amortization.
Monthly Payment ≈ $7,390
Annual Debt Service ≈ $88,680
Lenders care most about the annual debt service figure because they divide the property's NOI by it to check debt service coverage. Our DSCR calculator runs that test.
Amortization vs Loan Term
Commercial loans usually separate the amortization period from the loan term. A common structure amortizes payments over 25 or 30 years but matures in 5 to 10 years, leaving a balloon balance due at maturity that the borrower refinances or pays off from a sale. A longer amortization lowers the monthly payment without changing the rate, which is why sponsors often negotiate for 30-year schedules on stabilized assets.
Interest-Only Periods
Many commercial loans, and most bridge loans, include an interest-only period at the start of the term. During that window the payment covers interest alone, so it is lower than the amortizing payment and no principal is retired. The calculator above models an optional interest-only period so you can see both payment levels side by side.
Frequently Asked Questions
How do you calculate a commercial loan payment?
Apply the standard amortization formula to the loan amount, interest rate, and amortization period. A $1,000,000 loan at 7.5 percent amortized over 25 years carries a monthly payment of roughly $7,390. The calculator above does the math and also shows annual debt service and total interest.
What amortization period do commercial loans use?
Most commercial real estate loans amortize over 20 to 30 years, with 25 years being a common midpoint. The amortization period is often longer than the loan term itself, which creates a balloon balance due at maturity.
What is a balloon payment on a commercial loan?
A balloon payment is the remaining principal balance due when the loan matures before the amortization schedule finishes. A loan amortized over 25 years with a 10-year term still carries a large balance at year 10, and the borrower typically refinances or sells to retire it.
How does an interest-only period change my payment?
During an interest-only period the payment covers interest alone, so it is lower than the fully amortizing payment. A $1,000,000 loan at 7.5 percent carries an interest-only payment of $6,250 per month versus roughly $7,390 amortizing. No principal is paid down during the interest-only window.
What interest rate should I use in the calculator?
Rates vary by lender, property type, leverage, and borrower strength, so run a range around current market levels rather than a single number. Bank and conventional CRE loans generally price lower than bridge or private money, and the spread between programs can be several percentage points.
Does this calculator include taxes, insurance, or fees?
No. It models principal and interest only. Commercial loans also involve closing costs, origination fees, and in some cases reserves or escrows, so your total cost of borrowing will be higher than the payment alone.