Estimate your CRE loan payments, LTV ratio, and balloon payment
Typical: 20-35% for CRE
Typical: 6.5-9% for CRE
Monthly Payment
$0.00
LTV Ratio: 0%
Loan Amount
$0.00
Down Payment
$0.00
Balloon Payment
$0.00
Total Interest
$0.00
A commercial real estate (CRE) loan is financing used to purchase, refinance, or renovate income-producing commercial property. These properties include office buildings, retail shopping centers, industrial warehouses, multifamily apartment complexes, hotels, and mixed-use developments.
Unlike residential mortgages that are primarily based on the borrower's personal income and credit history, commercial real estate loans are evaluated primarily on the property's income potential. Lenders assess the property's net operating income (NOI) and debt service coverage ratio (DSCR) to determine loan eligibility and terms.
Commercial real estate loans are typically larger than residential loans, often ranging from $250,000 to millions of dollars. They require larger down payments, have shorter terms, and use more complex underwriting criteria. Understanding these differences is essential for real estate investors and business owners.
Calculating commercial real estate loan payments involves multiple steps due to the unique structure of CRE loans:
Loan Amount = Property Value − Down Payment
LTV Ratio = (Loan Amount ÷ Property Value) × 100
Monthly Payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
Balloon Payment = Remaining Balance at Loan Term End
Total Interest = (Payment × Amortization Months) − Loan Amount
$750,000 commercial property with 25% down at 7.5%:
| Property Value | $750,000.00 |
| Down Payment (25%) | $187,500.00 |
| Loan Amount | $562,500.00 |
| LTV Ratio | 75% |
| Interest Rate | 7.5% |
| Loan Term | 10 years |
| Amortization | 25 years |
| Monthly Payment | $4,157.64 |
| Balloon Payment | $412,500.00 |
| Total Interest | $684,792.00 |
The Loan-to-Value (LTV) ratio is a critical metric in commercial real estate lending. It measures the relationship between the loan amount and the property's appraised value. LTV is calculated by dividing the loan amount by the property value and expressing it as a percentage.
Lenders use LTV to assess risk. A lower LTV means the borrower has more equity in the property, reducing the lender's risk. Commercial real estate lenders typically prefer LTV ratios of 65-80%. An LTV above 80% indicates higher risk and may result in loan denial or higher interest rates.
Here's how different down payments affect LTV on a $750,000 property:
Commercial real estate interest rates are influenced by multiple factors including the property type, borrower's creditworthiness, LTV ratio, DSCR, and overall market conditions. As of 2026, CRE interest rates typically range from 6.5% to 9%.
Different property types carry different risk profiles, which affects rates. Multifamily properties generally have the lowest rates due to stable rental income. Retail and office properties may have higher rates due to market volatility. Industrial properties fall in between.
Borrowers with strong financial profiles—high credit scores, significant net worth, and experience in commercial real estate—qualify for the best rates. The relationship between interest rate and total cost is significant; even a 0.5% rate reduction can save tens of thousands over the loan term.
Amortization in commercial real estate refers to the schedule over which loan payments are calculated. Unlike residential mortgages that fully amortize over the loan term, CRE loans often have amortization periods that exceed the loan term, creating a balloon payment structure.
Common CRE amortization periods are 25-30 years, while loan terms are typically 5-10 years. This means your monthly payments are calculated as if the loan would be paid over 25-30 years, but the remaining balance (balloon payment) is due at the end of the shorter loan term.
The balloon payment structure benefits lenders by allowing them to reassess the loan and potentially adjust rates at refinancing. For borrowers, it means planning for a significant future payment or arranging refinancing before the balloon comes due.
Commercial real estate loan terms are significantly shorter than residential mortgages. While home loans typically span 15-30 years, CRE loans usually have terms of 5-10 years. Some longer-term options exist (15-25 years) but are less common and often require credit enhancement.
The shorter term creates refinancing risk—borrowers must refinance or pay off the balloon payment when the term ends. If interest rates have risen, refinancing becomes more expensive. This risk must be factored into investment decisions.
Borrowers can mitigate refinancing risk by selecting longer loan terms when available, maintaining strong property performance, and building relationships with lenders. Some loans offer extension options that provide flexibility if refinancing isn't favorable at term end.