How Commercial Real Estate Loans Work

When you take out a balloon commercial real estate loan, you’re given a term typically ranging from 5 to 7 years. You’ll have fixed monthly payments through that term, but those payments aren’t set up to cover the entire loan repayment. Instead, the monthly payments are calculated as if the loan is a traditional 25- or 30-year mortgage—like a residential mortgage. At the end of your 5- to 7-year term, you’ll have paid off only a portion of your principal balance, so the rest is due all at once.