Commercial Mortgage Calculator
Free commercial mortgage calculator. Estimate monthly payments for commercial real estate including office, retail, industrial, and multifamily properties.
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Commercial Mortgage Benchmarks
LIVE DATASource: MBA, CBRE, CoStar 2025–2026
Commercial Loan Comparison
| Property Type | Avg Rate | Max LTV | Min DSCR |
|---|---|---|---|
| Multifamily | 6.75% | 80% | 1.20x |
| Office | 7.50% | 70% | 1.30x |
| Retail | 7.75% | 70% | 1.30x |
| Industrial | 7.00% | 75% | 1.25x |
| Mixed Use | 7.50% | 70% | 1.25x |
Commercial rates vary by property type, location, borrower experience, and loan size. Contact multiple lenders for quotes.
How Do You Compare?
UPDATES LIVEShowing median values. Click Calculate for your numbers.
What This Means For You
UPDATES LIVEYour 1.35x DSCR and 75% LTV position you well for lender approval.
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CONNECTEDHow this connects to your broader financial picture.
What Should You Do Next?
UPDATES LIVEBased on your commercial mortgage analysis.
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Commercial Readiness Check
| Factor | Status | Action |
|---|---|---|
| DSCR | On Track | Target 1.25x+ for approval. Higher DSCR = better terms. |
| LTV ratio | Review | Most commercial lenders cap at 75–80%. Lower LTV = lower rate. |
| Property NOI | On Track | Verify NOI with trailing 12 months of actual income/expenses. |
| Balloon strategy | Plan Ahead | Have a refinance or exit plan 12+ months before balloon maturity. |
| Market conditions | Mixed | Commercial rates elevated at 7–8.5%. Cap rate compression has slowed. |
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This calculator is for informational and educational purposes only. Results are estimates based on the information you provide and standard financial formulas. This is not financial advice. Consult a qualified financial advisor for decisions specific to your situation. Full Disclaimer
Learn More About Commercial Mortgages
Things to Know
Essential concepts for understanding your results
DifferencesHow do commercial mortgages differ from residential?
Commercial loans are evaluated on property income potential rather than borrower income. Key differences: shorter terms (5-25 years vs 30), higher rates (+1-2%), larger down payments (20-35%), faster amortization, and balloon payments common. Qualification is based on Debt Service Coverage Ratio (DSCR) — the property's net income must cover mortgage payments by 1.2-1.5x. Personal guarantees are often required for small/mid-size commercial loans.
DSCRWhat is the Debt Service Coverage Ratio?
DSCR = Net Operating Income ÷ Annual Debt Service. A property generating $120,000 NOI with $96,000 annual mortgage payments: DSCR = 1.25 — meaning income covers debt by 125%. Most commercial lenders require minimum 1.2-1.25 DSCR. Higher DSCR = easier approval and potentially better rates. Below 1.0 means the property does not generate enough income to cover the mortgage — a red flag that requires additional borrower strength.
Loan TypesWhat types of commercial mortgages are available?
Conventional: bank/credit union loans, 5-25 year terms, competitive rates for strong borrowers. SBA 504: 10-25% down, 25-year terms, lower rates — for owner-occupied properties. SBA 7(a): flexible use, up to $5M, 25-year terms. CMBS: securitized loans, fixed rates, non-recourse — for larger properties. Bridge loans: short-term (6-36 months), higher rates, for renovation or stabilization before permanent financing.
Cap RateHow does cap rate relate to property value?
Cap Rate = Net Operating Income ÷ Property Value × 100. Also used inversely to estimate value: Value = NOI ÷ Cap Rate. A property with $100,000 NOI at 7% cap rate: value = $1,428,571. Lower cap rates indicate lower risk/higher prices (downtown office: 4-5%), higher cap rates indicate higher risk/lower prices (suburban retail: 7-9%). Cap rates compress when interest rates fall and expand when rates rise.
How Commercial Mortgages Work
Commercial mortgages finance income-producing properties — office buildings, retail centers, apartment complexes, warehouses, and mixed-use developments. They differ fundamentally from residential mortgages in structure, qualification, and risk. The lender evaluates the property's income potential more than the borrower's personal income, using metrics unique to commercial real estate.
Key differences from residential mortgages:
| Feature | Residential | Commercial |
|---|---|---|
| Down payment | 3–20% | 20–35% |
| Loan term | 15–30 years | 5–25 years (often with balloon) |
| Interest rate | 6.0–7.5% | 6.5–9.5% |
| Primary qualification | Borrower income & credit | Property income (DSCR) |
| Amortization | Fully amortizing | Often 25–30yr amortization with 5–10yr balloon |
| Recourse | Full recourse (personal liability) | Often non-recourse (property secures loan) |
| Prepayment penalty | Usually none (QM loans) | Common (yield maintenance or defeasance) |
The balloon structure is the most important difference for commercial borrowers. A typical commercial loan has a 25-year amortization schedule but a 10-year term — meaning the full remaining balance is due after 10 years. You must refinance, sell, or pay off the balance at that point. This refinancing risk is the primary concern in commercial real estate: if property values have declined or interest rates have risen, refinancing may be difficult or expensive.
The Key Metric: Debt Service Coverage Ratio (DSCR)
Commercial lenders care most about the property's ability to generate enough income to cover the loan payments. The Debt Service Coverage Ratio (DSCR) measures this:
DSCR = Net Operating Income (NOI) ÷ Annual Debt Service
Most lenders require a DSCR of 1.20–1.35 minimum — meaning the property's income must exceed debt payments by 20–35%. A property with $150,000 NOI and $120,000 in annual mortgage payments: DSCR = 1.25 (meets the typical 1.20 minimum). Below 1.0 means the property cannot cover its debt — an automatic rejection.
DSCR requirements by property type:
| Property Type | Typical Min DSCR | Typical LTV Max |
|---|---|---|
| Multifamily (5+ units) | 1.20–1.25 | 75–80% |
| Retail | 1.25–1.35 | 65–75% |
| Office | 1.25–1.40 | 65–75% |
| Industrial/warehouse | 1.20–1.30 | 70–75% |
| Hotel/hospitality | 1.35–1.50 | 60–70% |
| Mixed-use | 1.25–1.35 | 65–75% |
Notice that hotels require the highest DSCR and lowest LTV — their income is the most volatile (daily room rates vs long-term leases). Multifamily properties get the most favorable terms because residential demand is the most stable.
Types of Commercial Loans
Conventional commercial (bank/credit union): Best rates (6.5–8.5%), strictest requirements (680+ credit, 25%+ down, 1.25+ DSCR, strong financials). Terms: 5–25 years. Best for established borrowers with strong properties and financials. SBA 504 loans offer below-market rates with 10% down for owner-occupied commercial properties.
SBA 7(a) and 504 loans: Government-backed programs for small business owners purchasing or improving commercial property. SBA 504: up to $5.5 million, 10% down, 25-year fixed rate, below-market rates (approximately 6.0–7.0%). SBA 7(a): up to $5 million, variable rate, 25-year term. Both require the business to occupy 51%+ of the property. According to SBA data, the agency guaranteed $28.5 billion in 7(a) loans in fiscal year 2024.
CMBS (Commercial Mortgage-Backed Securities): Loans packaged and sold to investors. Competitive rates, non-recourse, higher leverage (up to 75–80% LTV). Downsides: rigid terms, complex prepayment penalties (defeasance), and limited ability to modify the loan. Best for stabilized, institutional-quality properties. The CMBS market represents approximately $700 billion in outstanding loans (MBA data).
Bridge loans: Short-term (6–36 months) financing for property acquisition, renovation, or repositioning. Higher rates (8–12%+) and fees (1–3 points). Used to acquire and stabilize a property before refinancing into permanent financing. Essential for value-add strategies but expensive if the stabilization takes longer than expected.
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