Commercial lenders don’t size a loan off a single number the way a residential mortgage does. They check three constraints at once, debt service coverage ratio (DSCR), loan-to-value (LTV), and debt yield, and whichever one is most restrictive sets your actual maximum loan amount. This commercial mortgage calculator runs all three checks simultaneously and tells you exactly which constraint is binding, so you know precisely why your loan is sized the way it is, not just what the final number is.

How to use this commercial mortgage calculator

1. Select your Currency, searchable by name or code, or add a custom currency.
2. Enter the Property Value and the annual Net Operating Income (NOI).
3. Enter your Requested Loan Amount, the loan size you actually want to check.
4. Enter the Interest Rate (annual %) and Amortization Period (years), the schedule payments are calculated against.
5. Enter the Loan Term (years, balloon due), which can be shorter than the amortization period.
6. Set your Target DSCR, Max LTV (%), and Min Debt Yield (%), the three underwriting constraints lenders check.
7. Optionally enable “Include step-down prepayment penalty” and edit the Year 1-5 penalty percentages to match your lender’s actual schedule.
8. Optionally enable “Include bank / lender details in export” to add a bank name, address, and reference number to your exported report.
9. Click Calculate to see your Monthly Payment, Max Loan Supported, which constraint is binding, and your DSCR, LTV, Debt Yield, and Cap Rate all at the requested loan amount.
10. Review the Principal vs Interest chart and the full Amortization Schedule through your loan term.
11. Switch to the “Compare Loan Structures” tab to test multiple amortization/term/rate combinations against the same property and NOI.
12. Export your results as PDF, Excel, or PNG.

What this commercial mortgage calculator does

Unlike a residential mortgage, where the loan amount is largely set by the purchase price and down payment, a commercial loan is sized by whichever of three separate lending tests produces the smallest maximum loan: DSCR (can the property’s income cover the debt payment with an adequate cushion), LTV (is the loan a reasonable percentage of the property’s value), and debt yield (does the loan amount avoid over-leveraging the property based purely on its income, regardless of interest rate assumptions). This calculator computes the maximum loan each of these three tests would independently allow, then reports the lowest of the three as your actual Max Loan Supported, along with which specific constraint is responsible for that ceiling.

The three sizing constraints explained

DSCR (Debt Service Coverage Ratio)

DSCR measures how many times over the property’s income covers its debt payments. A DSCR of 1.25 means the property generates 25% more income than needed to make its loan payments, a common minimum lenders require as a cushion against vacancy or expense increases. This calculator works the DSCR formula backward: given your NOI and Target DSCR, it solves for the maximum annual debt service that still hits your target, then converts that into a maximum loan amount at your entered rate and amortization period.

LTV (Loan-to-Value)

LTV is the simplest of the three constraints: it caps the loan as a straight percentage of the property’s appraised value, regardless of income. A Max LTV of 70% on a $10,000,000 property caps the LTV-based maximum loan at $7,000,000, independent of what the property earns.

Debt Yield

Debt yield became a standard third check after the 2008 financial crisis specifically because DSCR alone can be misleading when interest rates are unusually low: a low rate makes debt service small, which can make DSCR look comfortable even on a loan that’s actually oversized relative to the property’s income. Debt yield strips interest rate and amortization out of the picture entirely, measuring NOI as a straight percentage of loan amount, which is why it acts as a rate-independent backstop against over-leveraging.

Why the “binding constraint” matters more than the final number

Knowing your Max Loan Supported is useful, but knowing which constraint produced it tells you what actually needs to change to get more leverage. If DSCR is binding, a lower interest rate or longer amortization period (which both reduce the payment for the same loan amount) could unlock a larger loan. If LTV is binding, no rate or amortization change helps, you’d need a higher appraised value or a lender willing to go beyond that LTV ceiling. If Debt Yield is binding, the property’s income itself is the limiting factor, and neither rate shopping nor amortization restructuring changes the math. This calculator’s Binding Note and the DSCR/LTV/Debt Yield Max Loan breakdown make this diagnosis immediate rather than something you’d have to work out by running all three formulas separately.

Amortization period versus loan term: the balloon structure

Commercial loans routinely use a shorter Loan Term than Amortization Period, for example payments calculated as if paying off the loan over 25 years, but the full remaining balance actually comes due after just 10 years. This calculator models that structure explicitly: your Monthly Payment is calculated using the full Amortization Period, but the Amortization Schedule and balloon balance reporting stop at your entered Loan Term, showing the real remaining balance you’d need to refinance or pay off at that point, sometimes a substantial sum even after a decade of payments.

Step-down prepayment penalties

Many commercial loans charge a prepayment penalty that decreases each year since origination, commonly structured as a step-down schedule (for example 5%, 4%, 3%, 2%, 1% across years 1 through 5, then 0% after). Enabling “Include step-down prepayment penalty” lets you enter your lender’s actual year-by-year percentages, and the calculator produces an Estimated Prepayment Cost by Year table, applying each year’s penalty percentage to that year’s estimated remaining balance. Years beyond your entered 5-year schedule are treated as fully open (0% penalty) by default, though you can adjust any year’s percentage to match your specific loan documents.

Comparing multiple loan structures

The “Compare Loan Structures” tab lets you test several combinations of amortization period, loan term, and interest rate against the same Property Value, NOI, Target DSCR, Max LTV, and Min Debt Yield, since those five inputs are shared across every structure you add. This is useful for comparing, for example, a 25-year amortization at one rate against a 20-year amortization at a different rate, seeing each structure’s Monthly Payment, Balloon Balance, DSCR at your requested loan, and Total Interest over the term side by side in one comparison table, plus a chart comparing balloon balances directly.

Cap rate as a reference point

Alongside the three lending constraints, the calculator also reports the property’s Cap Rate (NOI divided by Property Value), shown with a typical reference range of 5% to 10%. Cap rate isn’t a loan-sizing constraint the way DSCR, LTV, and debt yield are, but it’s a standard quick check on whether a property’s income relative to its price falls within a normal range for its market and asset type, useful context when evaluating whether the deal itself makes sense before focusing purely on how it’s financed.

A note on accuracy

This calculator provides estimates only and is not a loan commitment or offer of credit. The DSCR, LTV, and debt yield minimums you enter are reference points you control, not any specific lender’s actual underwriting requirements, which vary by lender, property type, market, and borrower creditworthiness. Use this tool to understand which constraint would limit your deal and by how much, then confirm actual terms with a qualified commercial mortgage broker or lender.

Frequently asked questions