David is a Chartered Financial Analyst with 15 years of experience in commercial real estate financing and corporate finance.
This 4-in-1 Commercial Mortgage calculator helps you analyze your financing options for business property. Enter any three variables—Loan Amount, Annual Rate, Term, or Monthly Payment—to solve for the fourth.
Commercial Mortgage Calculator
Commercial Mortgage Formulas
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Solve for Loan Amount (P):
P = M [ (1 + i)^n – 1 ] / [ i(1 + i)^n ]
Solve for Term (n):
n = -ln(1 – (P*i / M)) / ln(1 + i)
Solve for Rate (i):
*Solved iteratively (no simple formula)
Formula Variables
- (M) Monthly Payment: The monthly payment for principal and interest (P&I).
- (P) Loan Amount: The total amount of the commercial loan.
- (R) Annual Rate: The annual interest rate for the loan (e.g., 7.5 for 7.5%).
- (T) Loan Term (Years): The total length of the loan amortization period.
- (i): Monthly interest rate (R / 12 / 100)
- (n): Total number of payments (T * 12)
Related Calculators
What is a Commercial Mortgage Calculator?
A commercial mortgage calculator is a tool used to determine the monthly payment for a commercial real estate loan. These loans are used to purchase or refinance properties intended for business purposes, such as office buildings, retail centers, apartment complexes, or industrial warehouses.
Unlike residential mortgages, commercial mortgages often have different terms. They typically have shorter amortization periods (e.g., 20 or 25 years) and may include a “balloon payment” — a large, lump-sum payment due at the end of a shorter term (e.g., 5 or 10 years). This calculator focuses on the fully amortized payment (P&I) over the full term, which is the basis for most loan underwriting.
Using this 4-in-1 calculator, you can solve for any of the four main variables. For instance, if you know the monthly payment you can afford, you can solve for the total Loan Amount (P) you can borrow. If you know the loan amount, rate, and payment, you can solve for the Term (T) it will take to pay it off.
How to Calculate Commercial Mortgage Payments (Example)
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Gather Your Loan Details
You are purchasing an office building with a $750,000 (P) loan. The bank offers a 7.5% (R) interest rate amortized over 20 years (T). You need to find the monthly P&I payment (M).
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Find Monthly Rate (i) and Total Payments (n)
Monthly Rate (i) = 7.5% / 12 / 100 = 0.00625
Total Payments (n) = 20 Years * 12 = 240 -
Apply the Amortization Formula
The formula is: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
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Calculate the Value
M = $750,000 [ 0.00625 * (1.00625)^240 ] / [ (1.00625)^240 – 1 ]
M = $750,000 [ 0.00625 * 4.460756 ] / [ 4.460756 – 1 ]
M = $750,000 [ 0.0278797 ] / [ 3.460756 ]
M = $750,000 * 0.0080559 -
Final Result
Your monthly Principal & Interest (P&I) payment will be $6,041.93.
Frequently Asked Questions (FAQ)
Commercial loans typically have shorter terms, higher interest rates, and larger down payment requirements (often 20-30%) than residential loans. They are underwritten based on the property’s income-generating potential (like rent) rather than just the borrower’s personal income.
How do I find the loan amount I can afford?Enter the Monthly Payment (M) you can afford, the current Annual Rate (R), and the Loan Term (T) you want (e.g., 20 years). The calculator will solve for the Loan Amount (P) you can support with that payment.
What is a balloon payment?A balloon payment is when a loan is amortized over a long period (like 20 years) but the full remaining balance is due much sooner (e.g., 5 or 10 years). This calculator solves for the fully amortized payment; a balloon loan would have the same monthly payment but would not be fully paid off at the end of the shorter term.
Does this payment include taxes and insurance?No, this calculator solves for Principal & Interest (P&I) only. For commercial properties, property taxes, insurance, and maintenance (NNN expenses) are often calculated separately and can be very significant. You must add those costs to your P&I payment to find your total monthly obligation.