Commercial Balloon Refinance Calculator
Enter the current loan terms, maturity value, NOI, and likely refinance standards. The calculator estimates the balloon balance, the refinance amount supported by DSCR and LTV, and any cash needed at maturity.
Cash needed at maturity$0.00
- Current monthly payment
- $7,067.79
- Balloon payment at maturity
- $786,333.96
- Interest paid before maturity
- $634,469.00
- Maturity LTV
- 52.42%
- DSCR if the full balloon is refinanced
- 1.72
- DSCR-limited refinance amount
- $1,082,556.90
- LTV-limited refinance amount
- $1,050,000.00
- Maximum supported refinance
- $1,050,000.00
- Binding refinance constraint
- Neither; both limits support the balloon
Assumes fixed rates, monthly payments, no extra principal payments, and no refinance closing costs.
The refinance capacity is the smaller of the amount supported by NOI at the selected DSCR and the amount allowed by LTV.
How to use this calculator
- Enter the current loan amount, note rate, amortization period, and balloon term.
- Estimate the property value and annual NOI at the balloon maturity date.
- Enter the refinance rate, refinance amortization, required DSCR, and maximum LTV a replacement lender might use.
- Review the cash gap and the binding refinance constraint before changing assumptions for a stress test.
How the refinance gap is calculated
A commercial balloon loan can have a payment based on a long amortization schedule while the remaining balance comes due much sooner. This calculator first finds the scheduled payment and the balance left at maturity. It then asks whether a new loan could refinance that balance under two common underwriting limits: debt service coverage ratio and loan-to-value.
The current monthly payment is calculated with the standard amortization formula:
P = L × r ÷ (1 − (1 + r)^−N)
- L is the current loan amount.
- r is the current monthly interest rate.
- N is the current amortization period in months.
If the current rate is zero, the payment is L ÷ N. After k monthly payments, the balloon balance is:
B = L(1 + r)^k − P × ((1 + r)^k − 1) ÷ r
For a zero current rate, the balance is the original principal minus the scheduled principal repaid. A balloon term cannot exceed the amortization period because there would be no scheduled balloon after the loan has fully amortized.
How DSCR and LTV limit the refinance
For the replacement loan, DSCR limits the monthly debt service the property can support. If annual NOI is Q and the required DSCR is d, supported monthly debt service is Q ÷ (12 × d). That payment is converted into a loan amount using the refinance rate and amortization period.
LTV is simpler: the LTV-limited amount is the estimated property value at maturity multiplied by the maximum refinance LTV. The maximum supported refinance is the smaller of the DSCR-limited amount and the LTV-limited amount. Cash needed at maturity is the balloon balance minus that supported refinance amount, floored at zero.
What moves the result most
The balloon balance is most sensitive to the current amortization period, the current rate, and the number of years until maturity. Refinance capacity is usually driven by NOI, refinance rate, lender DSCR, property value, and maximum LTV. A higher refinance rate can reduce DSCR capacity even if NOI is unchanged, because the same NOI supports less principal at a higher payment constant.
What this calculator leaves out
The result is a scheduled debt-service estimate, not a loan approval. It excludes origination fees, appraisal and legal costs, prepayment penalties, reserves, taxes, environmental work, lease rollover, lender adjustments to NOI, borrower liquidity, credit strength, debt yield, and property condition. It also assumes fixed rates, monthly payments, no interest-only period, no rate changes, and no extra principal payments.
Worked example
Suppose a $1,000,000 commercial mortgage has a 7% note rate, a 25-year amortization, and a balloon due in 10 years. The scheduled monthly principal-and-interest payment is $7,067.79. After 120 payments, the remaining balloon balance is $786,333.96, and scheduled interest paid before maturity is $634,469.00.
If the property is expected to be worth $1,500,000 at maturity with $120,000 of annual NOI, a 7.5% refinance rate, a 25-year refinance amortization, a 1.25x DSCR requirement, and a 70% maximum LTV, the DSCR-limited refinance amount is $1,082,556.90 and the LTV-limited amount is $1,050,000. The maximum supported refinance is $1,050,000, which is more than the balloon balance, so the cash needed at maturity is $0.
Common questions
How is a commercial loan balloon payment calculated?
The balloon payment is the remaining principal after the scheduled payments made before maturity. The payment is based on the amortization period, while the balloon term determines how many payments are made before the unpaid balance comes due.
Can NOI support refinancing the balloon balance?
NOI supports the refinance only if it can cover annual debt service at the lender required DSCR. This calculator converts NOI and minimum DSCR into a supported monthly payment, then converts that payment into a refinance loan amount.
How does maximum LTV limit a commercial refinance?
Maximum LTV caps the new loan as a percentage of the property value at maturity. Even when NOI supports a larger loan, the lender may stop at the LTV limit, which can create a maturity cash gap.
What happens if the property cannot support the balloon refinance?
If the balloon balance is larger than the smaller of the DSCR-limited and LTV-limited refinance amounts, the difference is shown as cash needed at maturity. In practice that gap may need to be paid down, refinanced with additional collateral, restructured, or addressed through a sale.
Why are loan term and amortization period different?
The amortization period sets the payment schedule. The balloon term sets when the remaining balance is due. A 10-year balloon on a 25-year amortization means the borrower makes 10 years of payments, then must repay or refinance the balance that would otherwise amortize over the remaining 15 years.
How should I stress-test the refinance interest rate?
Try a higher refinance rate than the rate you expect, then watch the DSCR-limited refinance amount and cash gap. A higher rate raises the payment on each dollar borrowed, so the same NOI supports less refinance debt.