Commercial Mortgage Calculator with Balloon Payment

Monthly payment and balloon balance for commercial and residential loans: set the amortization and term, compare two rates, and add escrow if you need it.

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Where the First Payment Goes

Early payments are almost entirely interest. The split shifts month by month as the balance falls.

Equity and Balance over the Loan

Equity built is the principal repaid to date; the balance is what still has to be refinanced or repaid.

Show full amortization schedule

Full amortization schedule with annual subtotals
#	Date	Payment	Interest	Principal	Balance

Annual subtotals shown in bold.

How it is calculated

PMT = P × [ r(1 + r)ⁿ ] ÷ [ (1 + r)ⁿ − 1 ]

The level payment that retires a loan over n periods when each period charges interest r on the balance outstanding at its start. Because the balance falls every month, the interest share of each payment falls with it and the principal share rises — which is why a mortgage pays down slowly at first and quickly at the end.

PMT: The level monthly payment of principal and interest.
P: Principal — the amount borrowed at closing.
r: Periodic interest rate: the annual rate divided by 12.
n: Number of payments in the amortization: years × 12.

A worked deal example

A $400,000 loan at 6.500% on a 30-year amortization running its full term.

Loan Amount: $400,000
Interest Rate: 6.500%
Amortization: 30 years
Term: Full amortization

Principal and interest come to $2,528.27 a month. That is the loan payment only: taxes and insurance are collected separately and are not part of the debt. Run to maturity the loan costs $510,178 in interest and leaves nothing outstanding — 56% of everything paid, and 1.28 times the amount borrowed. That is what a 30-year schedule at 6.500% costs in time: the early payments are almost all interest, because interest is charged on a balance that has barely moved. Shortening the amortization raises the payment but cuts that total sharply — on a commercial deal the amortization is often more negotiable than the rate, and it moves the numbers more.

Key Deal Takeaway $510,178 total interest

Frequently asked questions

What is the payment on a $1,000,000 commercial loan?

It depends mostly on the rate and the amortization. At 6.50%, $1,000,000 amortized over 30 years is $6,321 a month in principal and interest; over 25 years it is $6,752, and over 20 years $7,456. Interest-only at the same rate is $5,417. Most commercial loans end in a balloon after a 5 to 10-year term, so the payment is set by the amortization, not the term. The table further down this page shows the balance left after 5 and 10 years.

What is a balloon payment and how is it calculated?

A balloon payment is the loan balance still outstanding when the term ends, paid in one lump sum. The monthly payment is sized as though the loan ran its full amortization, so the term ends long before the balance reaches zero. On $400,000 at 6.500% amortized over 30 years, the payment is $2,528.27 a month; on a 5-year term, the balance due at maturity is $374,444. The balloon itself is principal only — the final month's interest is paid with the last regular payment — and most borrowers repay it by refinancing or selling rather than from cash.

Do you have to put 20% down on a commercial loan?

Usually more. Commercial lenders typically lend 55% to 75% of value, so 25% to 45% down is normal, and the lender also tests whether the property’s income covers the payment, which can cut the loan below the LTV cap and raise the down payment further. Owner-occupied loans under SBA programs can go as low as 10% down. The structure differs from a home loan too: a 5, 7 or 10-year term on a 20 to 30-year amortization, so most commercial loans end in a balloon rather than paying off. Prepayment penalties are common, and the rate is often quoted against a Treasury or swap benchmark plus a spread. The payment arithmetic is the same, which is why this calculator handles both; for sizing a commercial loan on income, use the Commercial Real Estate Investment Calculator.

Why is my payment sized on the amortization instead of the loan term?

Because a balloon loan is deliberately structured that way. A five-year term on a thirty-year amortization means you pay as though the loan will run thirty years, then hand back whatever is left at the end of year five. Sizing the payment on the five-year term instead would roughly triple it and leave no balloon at all. If you want no balloon, set the structure to Fully (Self) Amortizing and the term and amortization become the same number.

Why does my lender’s payment differ by a few dollars?

Usually the day-count convention. This calculator solves the payment on a level 30/360 basis, which is how nearly all residential and most commercial loans are quoted. Some commercial lenders accrue interest on Actual/360, which charges roughly 365/360 of a year’s interest and produces a slightly different schedule — see the amortization schedule tool for that. Rounding rules and whether your first payment covers a partial month also account for small differences.

What the payment is made of, and how that changes

A level payment is constant; what it buys is not. Interest is charged on the balance outstanding, so early payments are mostly interest and late ones mostly principal. On the loan above — $400,000 at 6.500% over 30 years — half the principal is not repaid until year 22, not year 15.

The practical consequence: extra principal is worth far more early. A dollar repaid in year one avoids interest on that dollar for the whole remaining term; the same dollar in year twenty-five avoids five years of it.

Comparing two rates honestly

Comparing a lower rate against a higher one by payment alone is only valid when the two loans are otherwise identical. Two traps account for most bad comparisons.

Different amortizations. A longer schedule always shows a lower payment and almost always costs more in total. Compare total interest, not the monthly figure.
Different balloon balances. Where a term is shorter than the amortization, the two loans leave different balances outstanding at maturity. A comparison that ignores that is comparing payments while quietly assuming away a six-figure difference in what you still owe. This tool nets the balloon difference into its comparison for exactly that reason.

Points and fees are the third trap and are not modeled here: a rate bought down with an upfront payment is not comparable to one that was not until you account for the cost and the breakeven horizon.

Choosing an amortization

The amortization sets the payment and how fast the balance falls; the term only sets when the rest is due. On a round $1,000,000 at 6.50%, moving from a 30-year to a 20-year schedule raises the payment from $6,321 to $7,456 a month and leaves a much smaller balance to refinance:

Monthly P&I and remaining balance on $1,000,000 at 6.50%
Amortization	Monthly P&I	Balance after 5 years	Balance after 10 years
20 years	$7,456	$855,891	$656,615
25 years	$6,752	$905,622	$775,114
30 years	$6,321	$936,110	$847,761

Scale linearly for other loan sizes: a $2,500,000 loan pays 2.5 times these figures.

Lengthen it on income property. A longer amortization lowers annual debt service, which raises the coverage ratio and the loan a lender will size against the same NOI. If the goal is proceeds rather than lifetime interest, it is often the term to negotiate hardest. The Commercial Real Estate Investment Calculator sizes the loan from NOI directly.
Shorten it if you will hold to maturity. Judge the loan by total interest rather than the monthly payment; a longer schedule always looks cheaper month to month.

Estimates only. This calculator is an educational tool, not financial advice, a loan offer, or a commitment to lend. Actual payments, loan sizing and closing costs depend on your lender's underwriting, the day-count convention in your loan documents, and fees not modeled here. Confirm any figure with your lender or advisor before acting on it. For an official reference, see Buying a House: tools and resources (Consumer Financial Protection Bureau).

Published by RealPropTools · Commercial real estate underwriting tools Updated October 29, 2026