Commercial Mortgage Calculator

Commercial Mortgage Basics

Commercial mortgages differ significantly from residential loans. Terms are typically 5-10 year balloon periods with 25-year amortization, meaning the payment schedule is calculated over 25 years but the remaining balance comes due after 5-10 years. Interest rates run 1-2% higher than residential. Lenders focus heavily on the property income rather than borrower income, using the Debt Service Coverage Ratio (DSCR) as the primary metric. A DSCR of 1.25x means the property generates 25% more income than needed for loan payments.

Down payments range from 20-35% depending on property type. Multifamily (apartments) gets the best terms with 20-25% down. Office and retail typically require 25-30%. Special purpose properties (hotels, restaurants) may need 30-35%. SBA 504 loans can reduce the down payment to as little as 10% for owner-occupied commercial properties.

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