Commercial Real Estate Loan Amortization & Principal Paydown Calculator
Commercial loans feature distinct amortization and term mechanics. This calculator models year-by-year principal reduction, cumulative interest carry, and exact balloon maturity payoff balances across standard 5, 7, and 10-year hold horizons.
Standard Default Parameters
Underwritten Results Preview
Interactive real-time sliders and calculation engine enabled on live page.
Compound Periodic Amortization Schedule
With each payment, interest is calculated on the remaining unamortized principal balance. The remaining portion of the payment pays down principal, gradually reducing the interest expense in subsequent months.
Formula Components
Class A Self-Storage Facility
A sponsor finances a $5,000,000 loan with a life insurance company at 6.50% interest on a 25-year amortization with a 10-year maturity.
Inputs
Sizing Outcomes
Underwriting Limitations & Disclosures
- Commercial mortgage loans rarely amortize fully to zero because lenders enforce balloon maturities before the 25-to-30-year amortization concludes.
- Prepayment penalties (yield maintenance, defeasance, or step-down schedules) may penalize principal paydown beyond scheduled amortization.
- All calculated figures are provided for educational and deal screening purposes. Actual lender term sheets depend on full underwriting review.
Frequently Answered Financing Questions
Verified answers to common borrower and broker inquiries regarding loan sizing, guidelines, and execution.
How much principal is paid down on a commercial loan over a 5-year balloon term?
On a 25-year amortization schedule at typical commercial rates (6.5% to 7.0%), approximately 9% to 10% of the original principal is paid down over the first 5 years.
Because early loan payments consist mostly of interest, principal paydown accelerates substantially in later years, which is why 10-year terms amortize over 20% of principal.
Submit Financing Scenario →Can a commercial borrower make extra principal payments to reduce amortization?
Extra principal payments are subject to prepayment penalties during lock-out or yield maintenance windows, though some lenders allow up to a 10% annual principal curtailment without penalty.
Borrowers seeking prepayment flexibility should negotiate step-down penalty structures (e.g. 5-4-3-2-1) or open prepayment windows during the final 3 to 6 months before maturity.
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