Commercial Real Estate Glossary
Plain-language definitions of commercial real estate and lending terms. Built for brokers, borrowers, and anyone navigating CRE financing.
Amortization
Amortization is the process of paying down a loan's principal balance through scheduled payments over time. Learn the formula, how it affects CRE deal economics, and why the amortization schedule matters as much as the interest rate.
Balloon Payment
A balloon payment is a large lump-sum payment due at the end of a commercial loan term when the amortization period extends beyond the loan's maturity date. Most commercial real estate loans, including CMBS, bank, and life company loans, have balloon payments.
Bridge Loan
A bridge loan is a short-term commercial real estate loan, typically 6 to 36 months, used to 'bridge' the gap between acquiring or renovating a property and securing long-term permanent financing.
Cap Rate
Cap rate measures the rate of return on a commercial property based on its Net Operating Income relative to its value. Learn the formula, how to use it, and what cap rates mean for your deals.
Debt Yield
Debt yield measures a property's net operating income as a percentage of the total loan amount. It is the primary underwriting metric for CMBS and institutional commercial real estate lenders.
DSCR
DSCR (Debt Service Coverage Ratio) measures whether a property's income covers its debt payments. Learn the formula, how lenders use it, and what it means for your deals.
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