The quick read: A commercial real estate loan runs on two clocks. The term is when the loan matures and the remaining balance is due; the amortization is the schedule the monthly payment is calculated on. The OCC's Comptroller's Handbook (March 2022) says prudent lenders generally treat 30 years as a reasonable maximum amortization for income-producing property, with hotels generally at 20 years or less. Terms are shorter: Freddie Mac's April 2026 fixed-rate term sheet offers 5- to 10-year terms on up to a 30-year amortization, life-company and CMBS loans usually run 10 years or more, and bridge loans are usually written for up to three years, per the OCC. When the amortization outlasts the term, a balloon is due at maturity, and the amortization you take sets both your debt service coverage and the size of that balloon.
What is the difference between a loan term and amortization?
The loan term is the date the lender wants its money back, while the amortization is the number of years the monthly payment is calculated over, and on many commercial loans the second is much longer than the first. The gap between them is the balloon: the unpaid principal due on the maturity date.
A residential mortgage usually matches the two, so the last payment retires the loan. Commercial loans often do not. A lender may set a 10-year term and calculate payments as if the loan ran 25 or 30 years, which keeps the payment low enough for the property's income to cover it, and then asks for the rest at maturity.
The OCC handbook gives a worked case in a footnote on loan structure, which we reproduce here:
Loan amount: $1,000,000
Term: 5 years
Amortization: 25 years
Rate: 6 percent
Monthly payment: $6,443
Balance at maturity: $899,000
After five years of payments, roughly nine-tenths of the original principal is still owed. That is normal for a commercial loan, and it is why the maturity date matters as much as the rate. The handbook also describes a common bank structure, a five-year tenor with payments based on a 20-year amortization, where the bank re-underwrites the credit at each renewal. For what to do when that date arrives, see what to do when a commercial balloon payment comes due, and for the wider mechanics of rate, leverage and recourse, see how commercial real estate loans work.
How long are commercial loan terms by lender type?
Commercial loan terms run from up to three years on bridge loans to ten years or longer on life-company and CMBS loans, with agency fixed-rate multifamily loans offering five- to ten-year terms, according to the OCC handbook and Freddie Mac's April 2026 fixed-rate term sheet. Bank terms are set by each bank's own policy.
The OCC describes bridge loans as short-term financing that lets a newly built or acquired property reach stabilization, usually written for up to three years so the property can lease up and qualify for permanent financing or a sale. It describes life insurance companies, pension funds and CMBS conduits as term lenders whose loans usually feature terms of 10 years or more with fixed rates and are commonly nonrecourse.
Commercial loan term and amortization by lender type (OCC Comptroller's Handbook, March 2022; Freddie Mac fixed-rate term sheet, April 2026; 13 CFR 120.212):
| Attribute | Bank | Agency fixed-rate multifamily | CMBS or life company | Bridge | SBA 7(a) |
|---|---|---|---|---|---|
| Attribute Typical term | Bank Set by bank policy; the OCC's example uses a 5-year tenor | Agency fixed-rate multifamily 5 to 10 years (up to 30 if not securitized) | CMBS or life company 10 years or more | Bridge Usually up to 3 years | SBA 7(a) Up to 25 years including extensions |
| Attribute Maximum amortization | Bank 15 to 30 years by property type | Agency fixed-rate multifamily 30 years | CMBS or life company Lender-set; the OCC treats 30 years as a reasonable maximum | Bridge Lender-set; ask whether it amortizes at all | SBA 7(a) Ask how the payment schedule is set |
| Attribute Balloon at maturity | Bank Yes when amortization outlasts the term | Agency fixed-rate multifamily Yes on a 30-year schedule with a 10-year term | CMBS or life company Yes when amortization outlasts the term | Bridge Remaining balance due; plan the takeout first | SBA 7(a) Ask for the projected balance at maturity |
| Attribute Source | Bank OCC handbook | Agency fixed-rate multifamily Freddie Mac term sheet, 4/26 | CMBS or life company OCC handbook | Bridge OCC handbook | SBA 7(a) 13 CFR 120.212 |
The SBA rule sets a ceiling, not a norm: a 7(a) loan should carry the shortest appropriate term given the borrower's ability to repay, ten years or less unless it finances real estate or equipment with a longer useful life, and a maximum of 25 years including extensions. The portion used to acquire or improve real property may add the period needed to finish construction. Bank and CMBS combinations beyond these published parameters vary by lender, and no public survey tracks them.
How long can amortization run by property type?
Amortization length tracks how durable the property's income is, and the OCC handbook gives banks a range of 15 to 30 years for income-producing property: stabilized multifamily up to 30, office, retail and industrial generally 25, and hotels generally not more than 20. These are supervisory parameters, not a cap any statute imposes.
The handbook is explicit on both points. It says there are no regulatory maximum amortization periods, and it calls its property ranges general parameters only, to be weighed against construction quality, physical condition, effective age, lease terms and the strength of the tenant base.
Stabilized multifamily (OCC): up to 30 years
Office, retail and industrial (OCC): generally 25 years
Hotels (OCC): generally not more than 20 years
Agency fixed-rate multifamily (Freddie Mac, April 2026): 30 years maximum
The logic is the property's remaining useful life and the volatility of its income. The OCC says properties with volatile income streams or weak prospects for future value usually merit shorter amortization, and it warns that a schedule matched to a long useful life can reduce principal so slowly that adequate collateral coverage over the term becomes uncertain. A hotel's income resets nightly, so lenders want it paid down faster than an apartment building's.
The handbook also notes the trade-off from the lender's side. Interest-only terms or long amortization lower the chance of a payment default by raising debt service coverage, but they raise the balloon and the loss if the loan defaults. That is why interest-only tenors are usually three to five years at most, per the OCC.
How does the amortization you choose change your payment, coverage and balloon?
On an illustrative $2,000,000 loan at 6.50% with a 10-year term and $200,000 of net operating income, stretching amortization from 25 to 30 years cuts the payment by about $863 a month and lifts coverage from 1.23x to 1.32x, but leaves about $145,000 more owed at maturity. Our arithmetic, not a quote.
The example below is illustrative; the 6.50% rate is an input chosen for the math, not a market quote.
Loan amount: $2,000,000
Rate: 6.50%
Term: 10 years
Net operating income: $200,000
25-year amortization, monthly payment: $13,504
25-year amortization, annual debt service: $162,049
25-year amortization, debt service coverage: 1.23x
25-year amortization, balance due at year 10: about $1,550,000
30-year amortization, monthly payment: $12,641
30-year amortization, annual debt service: $151,696
30-year amortization, debt service coverage: 1.32x
30-year amortization, balance due at year 10: about $1,696,000
Coverage is where the choice bites first. Freddie Mac's April 2026 fixed-rate term sheet, written for loans of $10 million or more, lists a 1.25x minimum amortizing debt coverage ratio for every term band. Used as a benchmark, at 1.23x the 25-year schedule falls short of a 1.25x test, so a lender sizing to 1.25x would cut the loan to about $1,975,000 at the same rate, about $25,000 less in proceeds. The 30-year schedule clears the same test with room to spare.
The balloon is the cost. Over ten years the 25-year schedule retires about $450,000 of principal and the 30-year schedule about $304,000, so the longer amortization leaves roughly $145,000 more to refinance or pay off at maturity. Neither is better in the abstract. A borrower who needs proceeds and cash flow today takes the longer schedule; one who expects a tighter refinance market at maturity may prefer the shorter one. Run your own numbers in the amortization schedule calculator before choosing.
What should you ask a lender about term and amortization?
Ask every lender for the term, the amortization, any interest-only period and the projected balance at maturity on the same page, because two quotes with the same rate can leave very different balloons and coverage ratios. Then ask how the lender sizes the loan, at what coverage minimum, and on which payment.
- Term and extensions. The maturity date, and whether any extension options exist and what they cost.
- Amortization schedule. The years the payment is calculated over, and whether it changes after an interest-only period.
- Interest-only period. How long it lasts. Freddie Mac's term sheet calculates coverage on interest-only loans using an amortizing payment, and the OCC expects banks to test interest-only loans as if they amortized, so interest-only rarely raises proceeds on its own.
- Balance at maturity. The projected balloon in dollars, so you can test a refinance against it today.
- Sizing test. The minimum coverage ratio and maximum leverage the lender will apply, and which one binds on your deal.
- Prepayment terms. What it costs to refinance early if the balloon looks risky later.
Asking for these in writing turns a rate quote into a comparable offer. The amortization usually decides proceeds; the term decides when you face the market again.
How do you get lenders competing on term and amortization?
The fastest way to see which term and amortization a deal can carry is to put one complete file in front of several lenders at once and compare the balloon, coverage and proceeds each one offers side by side, rather than accepting the first schedule one lender proposes.
There are two routes to that comparison, and the brokerage route comes first because it puts several lenders against one file.
- Brokerage route. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. Its software matches a deal against 20,000+ loan programs and typically surfaces 5–8 matches; its brokers then structure the request, negotiate term, amortization and prepayment on your side, and carry the deal toward closing. It is a 5-minute submit, with a median first offer in under an hour, from an institutional lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
- Direct route. Call lenders one at a time and ask each for the term, amortization and balloon. You get each lender's schedule, and the comparison work is yours.
Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
Submit your deal and compare term and amortization offers
The bottom line
Term and amortization are separate decisions. Terms run up to three years on bridge loans, five to ten on agency fixed-rate multifamily loans and ten or more on life-company and CMBS loans; amortization runs 15 to 30 years by property type, with hotels generally at 20 or less, per the OCC. A longer schedule raises coverage and proceeds and leaves a bigger balloon. Compare all three on every offer before you sign.