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Commercial Loan Payment Calculator with Balloon
A commercial loan payment is calculated with the standard amortization formula: payment equals loan times monthly rate divided by one minus (one plus monthly rate) to the minus number of payments. Commercial loans often amortize over 25 to 30 years but mature sooner, leaving a balloon balance.
Formula
How underwriters use it
The balloon balance is the refinancing risk. Underwriters test whether the property or business can refinance that balance at maturity at a higher rate and a lower value.
Interest-only periods lower early payments but leave a larger balloon; model both.
Frequently asked questions
What is a balloon payment?
A balloon payment is the remaining loan balance due at maturity when a loan's term is shorter than its amortization. A 10-year loan on a 25-year schedule still has most of its principal outstanding after 10 years, which must be repaid or refinanced.
How do I calculate annual debt service?
Multiply the monthly principal and interest payment by twelve. For interest-only loans, annual debt service is the loan balance times the annual interest rate.
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