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Commercial Mortgage Amortization
Model commercial debt based on current SOFR plus lender spreads.
Core Assumptions & Market Data
The commercial lending environment has fundamentally shifted. The days of 3.5% fixed-rate non-recourse debt are gone. Current commercial mortgages are typically priced over the Secured Overnight Financing Rate (SOFR) plus a spread of 250 to 400 basis points, resulting in total rates hovering between 7% and 8.5%.
Furthermore, regional banks have drastically reduced their Loan-to-Value (LTV) ratios. Deals that historically secured 75% leverage are now being capped at 55% to 60%, requiring sponsors to inject significantly more equity or source expensive mezzanine debt to close the gap.
Common Mistakes
- Ignoring amortization schedules. Commercial loans rarely amortize fully over the term (e.g., a 5-year term with a 25-year amortization), leaving a massive balloon payment due at maturity.
- Underestimating the cost of interest rate caps, which lenders now universally require on floating-rate debt to protect against further rate hikes.
Mortgage Calculator
Monthly Payment:
The natural next step is to evaluate your own numbers or consult our primary reporting.