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Free Commercial Loan Calculator · Term · Amortization · Balloon · DSCR

Commercial Loan & Balloon Calculator: What Does the Structure Really Cost?

Commercial debt isn't a 30-year mortgage. The loan matures long before it amortizes, so a 5-year term on a 30-year schedule leaves a large balance — the balloon — due at maturity. Enter your deal below to see the monthly payment, the balloon, the equity you build, and the debt service coverage a lender underwrites. Blue Sky doesn't publish rates — enter the rate your lender has quoted (or an illustrative one) to size it.

BSCBlue Sky Capital Advisors·Dominick Prevete
Commercial Loan Calculator

Size the loan, see the balloon.

Commercial debt has two clocks — the term it matures on and the schedule it amortizes against. Enter the deal to see the payment, the balloon at maturity, and the coverage a lender underwrites.

Purchase Price or Property Value
$
Loan amount
$
LTV
%
Interest rate (annual)
%
Interest-only period
Term / maturity
Amortization
First-year NOINOI = all property revenue minus operating expenses, before debt service
$
Loan summary
Enter your rate to size the loan

Blue Sky doesn't publish rates. Drop in the rate your lender has quoted — or an illustrative one — and the payment, balloon, and coverage all populate live.

The Structure

How commercial loans are structured.

A commercial real estate loan runs on two separate clocks. The first is the term — also called the maturity — which is how long the loan actually lasts before the full balance is due. The second is the amortization period, the longer schedule the lender uses to calculate your monthly payment. A typical structure is written as “5/30” or “7/30”: a 5- or 7-year term on a 30-year amortization.

Term ≠ Amortization

Payments are sized on the long amortization (keeps them affordable); the loan matures on the short term (keeps the lender's exposure near-term). The gap between the two is the balloon.

Why a 5/30 produces a balloon

In the early years of an amortizing loan, most of each payment is interest and only a thin slice pays down principal. After five years of a 30-year schedule, the borrower has retired only a small fraction of the balance. Everything still owed at the term's end comes due as a single lump sum. On the calculator's default ($1.4M loan, 5-year term, 30-year amortization), the majority of the original balance is still outstanding at maturity — that remaining balance is the balloon you must refinance or repay.

Where interest-only periods fit

Many commercial loans — particularly bridge and value-add financing — start with an interest-only (IO) period. During IO you pay only interest and no principal, which lowers the payment and preserves cash flow while a property is being stabilized, leased up, or renovated. The trade-off is that no equity is built through amortization during those months, so the balloon at maturity is larger. Lenders typically size the loan on the fully-amortizing payment even when they grant IO, which is why this tool shows both the IO and the amortizing DSCR side by side.

What refinancing at maturity looks like

When the term ends, the balloon is refinanced into a new loan, the property is sold, or the balance is repaid from other capital. Whether a refinance pencils depends on where rates, values, and credit conditions sit at maturity — not where they were at origination. A meaningful volume of commercial and multifamily debt is scheduled to mature over the 2026–2027 window, which makes planning the exit well ahead of maturity, and stress-testing it at conservative assumptions, the most useful thing a borrower with a balloon can do. We can't predict where rates land; we can help you structure for the maturity before it arrives.

A Worked Example

A $1.4M loan on a 5/30, traced number by number.

These figures match the calculator's default inputs, so you can re-run and stress-test them above. The rate below is an illustrative assumption you supply, not a rate Blue Sky offers or predicts.

Suppose your lender quotes 7.25% on a $2,000,000 property at 70% LTV — a $1,400,000 loan, 5-year term, 30-year amortization, no interest-only — with first-year NOI of $140,000.

Purchase price
$2,000,000
Loan amount (70% LTV)
$1,400,000
Down payment / equity in
$600,000
Illustrative rate · term · amortization
7.25% · 5 yr · 30 yr
Monthly P&I payment
$9,550
Interest-only payment (reference)
$8,458
Annual debt service (12 × P&I)
$114,606
First-year NOI
$140,000
DSCR = $140,000 ÷ $114,606
1.22
Balloon at maturity (balance after 60 months)
$1,321,303
Equity at payoff ($600,000 + $78,697 principal paid)
$678,697

Over five years the borrower pays down about $78,697 of the $1,400,000 — roughly 5.6%. The other $1,321,303 is the balloon. At 1.22x the NOI covers the amortizing payment with a cushion, which is the figure a lender underwrites. Change any input above and every number here recomputes live.

On the NOI line: DSCR is only as good as the NOI behind it. Use real, trailing operating numbers — not a pro-forma — and verify the largest expenses (taxes and insurance) for the specific property. In New Jersey, property tax rates vary widely by municipality; a wrong tax assumption can swing NOI by thousands and the DSCR by a tenth or more.

Key Terms

The vocabulary of commercial debt — defined correctly.

Amortization period
The schedule — in years — used to calculate the monthly payment, as if the loan would pay down to zero over that span. Commercial loans commonly amortize over 25 or 30 years even when the term is far shorter.
Balloon payment
The lump-sum balance still owed when a loan matures before it fully amortizes. It equals the remaining principal at the end of the term and must be refinanced, repaid, or covered by a sale.
Debt service
The total loan payments due over a period. Annual debt service is twelve monthly payments — interest-only during an IO period, principal-and-interest once the loan begins amortizing.
DSCR (debt service coverage ratio)
Net operating income divided by annual debt service. A 1.20x DSCR means NOI covers the payment 1.2 times over. Lenders generally want a cushion above 1.0x; exact minimums vary by lender and program.
Debt yield
NOI divided by the loan amount, as a percentage — the unlevered return a lender would earn if it took the property back on day one. It ignores rate and amortization, so it's a leverage backstop alongside DSCR and LTV.
LTV (loan-to-value)
The loan amount divided by the property's value or purchase price. A $1.4M loan on a $2M property is 70% LTV. Commercial leverage typically tops out around 75–80% depending on property type.
LTC (loan-to-cost)
The loan amount divided by the total project cost (purchase plus renovation or construction). Used on value-add and ground-up deals where cost, not stabilized value, drives the advance.
Maturity date
The date the term ends and the full remaining balance — the balloon — comes due. Distinct from the amortization period, which is only a payment-calculation schedule.
Prepayment penalty
A charge for repaying early, structured as yield maintenance (make the lender whole on lost interest), defeasance (substitute the loan's cash flows with securities), or a step-down (a declining percentage, e.g. 5-4-3-2-1 by year).
Recourse vs. non-recourse
Recourse debt lets the lender pursue the borrower's other assets if the collateral falls short; non-recourse limits the lender to the property itself, subject to standard 'bad-boy' carve-outs for fraud or waste.
Cap rate (capitalization rate)
A valuation yield: NOI ÷ property value, expressed as a percentage. It measures a property's unlevered return and is used to estimate value (value = NOI ÷ cap rate). This is NOT an interest-rate term.
Rate cap
A separate, unrelated concept: the ceiling on how high the interest rate can adjust on an adjustable-rate (ARM) loan — per adjustment and over the life of the loan. A rate cap limits rate movement; a cap rate values a property.
Commercial Loan FAQ

Term, balloon, IO, and DSCR — answered.

Why is my balloon payment so large?
Because a commercial loan's term and its amortization are two different clocks. A 5/30 structure means payments are calculated as if the loan were spread over 30 years, but the loan actually matures in 5. Over those first 5 years most of each payment is interest, so only a small slice of principal gets paid down — the rest is still owed as a lump sum (the balloon) at maturity. The longer the amortization relative to the term, the bigger the balloon. An interest-only period makes it larger still, because no principal is paid during the IO months.
Should I take an interest-only period?
It depends on the strategy. Interest-only lowers the monthly payment and lifts near-term cash flow, which is useful during a value-add or lease-up phase when income hasn't stabilized yet. The trade-off is that no principal is paid during the IO months, so your balloon at maturity is larger and you build no equity from amortization in that window. Lenders generally size the loan on the fully-amortizing payment even when they grant IO — which is why this calculator shows both the IO and the amortizing DSCR. Budget on the IO figure; expect the lender to underwrite to the amortizing one.
What DSCR do commercial lenders look for?
Debt service coverage ratio is NOI divided by annual debt service — how many times the property's net operating income covers the loan payment. Most stabilized commercial and multifamily programs look for coverage with a cushion above 1.0x, and stronger coverage generally supports better leverage and pricing. Exact minimums vary by lender, property type, and program, so treat any single threshold as a guideline rather than a rule. The honest way to read it: 1.0x means the income just covers the payment with nothing to spare, and lenders want margin above that to absorb vacancy and expense swings.
What happens at maturity?
At maturity the remaining balance — the balloon — comes due in full. In practice borrowers refinance into a new loan, sell the property, or pay the balance off with other capital. This is why the exit is part of underwriting from day one: a loan maturing into a higher-rate or tighter-credit environment can be harder to refinance than the original. Planning the maturity 12–18 months ahead — and stress-testing the refinance at conservative assumptions — is the single most important thing a borrower with a balloon can do.
Term vs. amortization — what's the difference?
The term (or maturity) is how long the loan actually lasts before the balance is due. The amortization period is the schedule used to calculate the monthly payment — the number of years the payment would take to pay the loan to zero if it ran that long. Commercial loans routinely pair a short term with a long amortization (e.g., a 7-year term on a 30-year amortization) so payments stay affordable while the lender keeps a near-term maturity. The gap between the two is exactly what creates the balloon.
What is debt yield, and how is it different from DSCR and LTV?
Debt yield is NOI divided by the loan amount, expressed as a percentage — the unlevered return a lender would earn if it had to take the property back on day one. Unlike DSCR it ignores the interest rate and amortization, and unlike LTV it ignores the appraisal, so it's a pure measure of how much income stands behind each dollar lent. Lenders use it as a backstop alongside DSCR and LTV: a deal can look fine on coverage and leverage yet still fail a debt-yield floor if the loan is large relative to the income.
Have a deal to structure?

We'll place the loan across 100+ lenders.

Blue Sky is a commercial mortgage advisor — we structure and place the financing, then shop the term, amortization, and IO across our lender network to find the right fit. Tell us about the property and the capital need and we'll come back with structure options and a written term sheet. No published rates, no obligation.

Structure your deal →Call Dominick: (908) 220-6404
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