Commercial Loan Calculator
Price commercial property finance on a long amortisation with an early balloon, and test the deal on the three ratios lenders actually use: LTV, DSCR and cash-on-cash.
Commercial Loan Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Results are a model, not a quotation — an institution's own figures govern.
- Every input is an assumption; change one and the answer changes with it.
- Rounding is applied only at the display layer, so totals may differ by a cent from a statement that rounds each line.
In short: Commercial mortgages amortise over twenty-five years but mature in five to ten, leaving a balloon. A $1,125,000 loan at 7.25% costs $8,131.58 monthly, leaves $890,777.51 due at year ten, and produces 1.38× coverage with a 9.98% cash-on-cash return.
Formula
Cap rate values the property independent of financing; cash-on-cash measures the return on the equity you actually put in.
Worked Example
- Size the loan. $1,500,000 less 25% = $1,125,000.00 at 75% LTV.
- Amortise over 25 years. At 7.25% the payment is $8,131.58.
- Find the balloon. After ten years, $890,777.51 remains due.
- Test coverage. $135,000 ÷ $97,578.93 = 1.38×.
- Measure the return. $37,421.07 of cash flow on $375,000 invested is 9.98%.
Analyst note. Coverage of 1.38× passes but leaves modest headroom: a 10% fall in NOI takes it to 1.24× and breaches a typical covenant. The maximum loan at 1.25 coverage is $1,245,145.90, so this request has room. The balloon is the real exposure — $890,777.51 falls due in ten years and must be refinanced at whatever rates then prevail, having retired only 20.8% of the principal.
Strengths & Limits Of This Model
Where this engine is strong
- Runs entirely in your browser — no figure you type is transmitted or stored.
- Shows the full working, so every number can be traced and challenged.
- Free, unmetered and free of affiliate incentives.
Where it stops
- Generalised assumptions cannot capture every individual circumstance.
- Jurisdiction-specific rules and mid-year changes may not be reflected.
- A model output is not a substitute for a professional review of your position.
Practical Use Cases
Underwriting an acquisition before making an offer
Cap rate, coverage and cash-on-cash together decide whether a deal works. Run all three before committing, then price the debt with the Business Loan Calculator.
Sizing the maximum supportable loan
Lenders size to coverage, not to your request. The maximum-loan output tells you the ceiling before you apply, and the SBA Loan Calculator shows how a longer term raises it.
Planning for the balloon
Refinancing exposure at maturity is the defining risk of commercial debt. Model it with the Balloon Loan Calculator and plan the exit from day one.
Methodology & Editorial Standards
The loan amortises over the stated schedule, typically twenty to twenty-five years, while maturing far earlier, which produces the balloon shown. Net operating income should be entered after all operating expenses, vacancy allowance and reserves, but before debt service, depreciation and tax; this is the standard definition and the one lenders apply. Coverage divides NOI by annual debt service, with thresholds commonly between 1.20 and 1.35. Cash-on-cash divides pre-tax cash flow by the equity invested and deliberately excludes closing costs, which would reduce it. The maximum loan is derived by inverting the annuity from the payment a 1.25 coverage ratio permits. Appreciation, tax treatment and principal paydown are excluded from the return figure. The engine implements the standard published formula for this calculation. Inputs are validated for domain and sign before evaluation, and any undefined case returns an em-dash rather than a spurious value.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
Commercial Loan Calculator — 20 Expert FAQs
20 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
How much down payment for commercial property?
Typically 25% to 30%, considerably more than residential. On a $1,500,000 property that is $375,000 at 25%, giving 75% LTV.
What is a debt service coverage ratio?
NOI divided by annual debt service. At $135,000 against $97,578.93 the ratio is 1.38× — passing, but with limited headroom before a typical 1.25 covenant is breached.
Why do commercial loans have balloons?
Lenders will not commit to a fixed rate for twenty-five years on commercial risk. They amortise long to keep payments serviceable but mature in five to ten years to reprice.
What is cash-on-cash return?
Annual pre-tax cash flow divided by cash invested. Here $37,421.07 on $375,000 is 9.98%, which measures the return on your equity rather than on the property.
What is a cap rate?
NOI divided by price, here 9.00%. It values the property independent of how it is financed and is the standard way to compare assets across a market.
How much can I borrow on a commercial property?
Whatever coverage supports, subject to LTV limits. At 1.25 coverage this NOI supports $1,245,145.90, so the $1,125,000 request fits comfortably.
Are commercial rates higher than residential?
Usually by one to two points, and terms are shorter. Commercial borrowers are also generally denied the long fixed-rate certainty residential borrowers take for granted.
What counts as net operating income?
Gross income less operating expenses, vacancy and reserves, before debt service, depreciation and tax. Overstating NOI by omitting reserves is the most common underwriting error.
What happens if I cannot refinance the balloon?
You must sell or default. This is why the balloon date should be planned from day one, and why deals with tight coverage are dangerous when maturity coincides with a weak market.
Is recourse or non-recourse better?
Non-recourse limits the lender to the property, which is safer for you and priced accordingly. Most smaller commercial loans are full recourse with personal guarantees.
How much principal is repaid before the balloon?
Only 20.8% here over ten years. Long amortisations retire principal slowly, so do not count on equity from paydown to refinance the balloon.
Does the property need to be leased before financing?
Usually yes, at least substantially. Lenders underwrite to in-place income; vacant or speculative properties require bridge or construction financing at materially higher cost.
Is this commercial loan calculator free to use?
Yes. It is free, requires no account, and has no usage limits. ApexConverter is funded by contextual advertising, never by selling user data.
Is my data sent to a server?
No. The engine runs as Vanilla JavaScript inside your browser under our Zero-Server Client-Side Execution model. Your figures are computed locally and are never transmitted, logged, or stored.
How accurate is this calculator?
It applies the standard closed-form formula in IEEE-754 double precision, rounding only at the display layer. The engine is reconciled against an independent reference implementation before release.
Does it work on mobile?
Yes. The interface is mobile-first with numeric keypad hints and is tested down to a 320-pixel viewport with no horizontal scrolling.
Can I use it offline?
Largely, yes. Because computation is client-side, the page continues to calculate without a network connection once it has loaded.
Which currency does it use?
Amounts display in US$ accounting format, but the underlying mathematics is currency-agnostic. The result is identical in any currency, so simply read the figures in your own.
Why does a result show an em-dash?
An em-dash indicates the calculation is not defined for the inputs given — typically a division by zero or a value outside the valid domain. We show a dash rather than a misleading number.
How do I report an error?
Email apexconverter.praxiscalc@gmail.com with the tool URL, your exact inputs, the output received and the output you expected. Verified mathematical errors are patched within 72 hours.