Short answer: yes, you can refinance a commercial balloon payment, and most owners do. Start 9 to 18 months before maturity. Your four paths are a refinance into new permanent debt, a bridge loan that retires the balloon and buys time, a sale, or a negotiated extension. The number that decides which one works is how much loan your property's income supports at today's rate compared with the balloon you owe.
If you have a maturity date on the calendar, you're ahead of the owners who look up six weeks out. Time is what lets you line up more than one option, put lenders in competition and pick the structure that fits where the property is headed. Here's how to work a $5M–$30M commercial balloon, with the arithmetic.
Have a maturity on the horizon? Bring me the loan and the property and I'll map the options against your timeline, no pressure to do anything today.
Map your refinance options →What a balloon payment is
The OCC Comptroller's Handbook defines it plainly: "A balloon payment is required at the end of the term to repay the remaining principal balance of the loan for a loan that does not fully amortize over its term" (Office of the Comptroller of the Currency). Most commercial real estate loans are built that way. The payment amortizes over 25 or 30 years, the loan matures in 5, 7 or 10, and whatever principal is left comes due in one lump.
Illustrative example, not a quote: a $12,000,000 loan written in 2016 at 4.0% on a 30-year amortization with a 10-year term costs about $687,500 a year. After ten years of payments, about $9,454,000 is still owed. That's the balloon, due on the maturity date in 2026.
How early should I start planning for a balloon payment?
Start 9 to 18 months before maturity. An appraisal, updated financials and underwriting all take time, and while a clean file can close in 15 to 30 days once terms are set, getting to those terms takes longer. Early, you can gather competing quotes, tune the file and fix what a lender will flag. Wait until 60 days out and your leverage is mostly gone, because lenders can see the date too. If your loan is in a CMBS trust, add time for the servicer and any defeasance. The dates that matter are covered in maturing CMBS loan: start 12 months out.
Can I refinance the balloon at today's rates?
It depends on how much loan your income supports now. Lenders size a new loan off net operating income and a minimum debt-service coverage ratio (DSCR), so a higher rate can size a loan smaller than your balloon. Keep the example going, again as an illustration only:
- NOI: $900,000 a year. On the old $687,500 payment that's about 1.31x coverage.
- Refinance the $9,454,000 balloon at 6.5%, 30-year amortization: debt service is about $717,100 and coverage is about 1.26x. At a 1.25x minimum, it clears.
- At 7.0%: debt service is about $754,800 and coverage drops to about 1.19x. At a 1.25x minimum, the property supports about $9,018,000, roughly $436,000 short of the balloon.
Half a point of rate is the difference between a routine refinance and a gap you have to fund. For where rates sit, the 10-year Treasury par yield was 5.24% on September 28, 2026 (U.S. Treasury), and fixed commercial loans price at a spread above indexes like that. If your numbers come out short, the full set of fixes is in DSCR too low to refinance.
What happens if I can't pay the balloon on the maturity date?
The loan is in maturity default, even if you never missed a monthly payment. The OCC warns that even borrowers who meet their payments "could find it difficult to refinance their balloon payment amount at maturity because of declines in property value." It happens often enough to be tracked separately. In April 2026, CMBS loans past their maturity date but still current on interest were 1.52% of loans outstanding, and counting them would have lifted the overall CMBS delinquency rate from 7.54% to 9.06%, according to Trepp (Yield PRO, May 4, 2026). What follows depends on the lender and the loan documents: an extension, a restructure, default interest or enforcement. None of it is a position you want to negotiate from.
What are my options when a commercial balloon comes due?
There are four real paths, and the right one depends on the property, your plans for it and the terms you can get today. Most owners weigh two or three at once, which is the point of starting early.
Refinance into permanent financing
The most common path. You replace the maturing loan with a new long-term loan and reset the clock. It's the cleanest route when the property is stabilized, the income supports a loan at least as large as the balloon, and you plan to hold.
Use a bridge loan to buy time
When the permanent loan the property supports today is smaller than the balloon, a commercial bridge loan can retire the balloon now and give you a defined window, usually 6 to 24 months, to raise occupancy, finish a value-add plan or season a new rent roll. It carries a higher rate than permanent debt, which is the cost of the time.
Sell the property
A balloon is a natural checkpoint to take gains, especially if the plan for the asset is done. Deciding early lets you sell on your schedule instead of listing against a deadline, and a bridge can hold the position if the sale needs more time.
Negotiate an extension with the current lender
The OCC lists "a renewal or extension of loan terms" among the workout forms banks use, so it's a legitimate ask. It's usually short, on the lender's terms, and it doesn't open your property to the wider market or reset your negotiating position. Use it as a step inside a plan, with a takeout already in motion.
Balloon payment options, side by side
| Option | Best when | What it does for you |
|---|---|---|
| Refinance to permanent | Property is stabilized, income supports a loan at least the size of the balloon, you plan to hold | Resets the clock on long-term terms; ends the balloon cycle for years |
| Bridge loan | Income supports less than the balloon today, or you're mid value-add | Retires the balloon now; buys 6–24 months to earn better permanent terms |
| Sale | Asset has appreciated, your plan is complete, or strategy has shifted | Captures gains on your schedule instead of against a deadline |
| Extension | You need a short, defined reprieve and a takeout is already underway | Buys time, not better financing; keeps the pricing with your current lender |
Structures shown are typical, not a quote or commitment; actual terms are set by third-party lenders subject to underwriting. See disclosures.
You're refinancing into a crowded year
The Mortgage Bankers Association counted $875 billion of commercial and multifamily mortgages, 17% of the $5.0 trillion outstanding, scheduled to mature in 2026. Depositories alone hold $396 billion of those maturities (MBA 2025 Survey of Loan Maturity Volumes, via MBA Newslink). Banks are still lending into it. In the Federal Reserve's July 2026 Senior Loan Officer Opinion Survey, "moderate and modest net shares of banks reported having eased standards" on loans secured by nonfarm nonresidential and multifamily properties (Federal Reserve). Standards easing across the market doesn't mean your own lender will renew. If it won't, see what to do when the bank won't renew.
Where a bridge fits when permanent financing isn't ready
Maybe occupancy dipped during a renovation, the rent roll hasn't caught up to a below-market purchase, or one signed lease would move the numbers enough to size a permanent loan above the balloon. A bridge retires the maturing loan, gives you a defined runway and lets you finish that plan. Then you refinance into permanent debt at the size the property has grown into. Underwriting leans on the asset, your equity and a clear exit, so a clean file can close in 15 to 30 days. See how we structure these on our commercial bridge loans page.
Why work the balloon through a broker
Your current lender has one answer, its own. Going back to it alone, or to a single bank, gives you one institution's appetite on one day. A broker takes the property to the lenders most likely to want it and makes them compete, and competition on the same file is what moves rate, proceeds and structure. Northern Ridge Capital matches your maturing loan to the right source from a network of 700+ banks, credit unions, debt funds, life companies, agency lenders and private capital. We're a broker, not a lender. Our fee is a 1% origination fee, paid only when the loan closes.
Want to see what your maturing loan can get in today's market?
Book a 15-minute call → or submit your dealFrequently asked questions
Can you refinance a balloon payment?
Yes. Refinancing is the most common way owners retire a commercial balloon. The new lender sizes the loan off your net operating income and its coverage minimum at today's rate. If that loan is at least as large as the balloon, you refinance. If it's smaller, you cover the gap with equity, a bridge loan or a second-position piece, or you sell.
How far in advance should I refinance a commercial balloon payment?
Start 9 to 18 months before maturity. That runway covers the appraisal, updated financials, competing quotes and any fixes to the property's numbers. Once terms are set, a clean file typically closes in 15 to 30 days.
What happens if I can't pay my commercial balloon payment?
The loan goes into maturity default even if every monthly payment was on time. The lender may extend, restructure, charge default interest or enforce, depending on the documents. In April 2026, CMBS loans past maturity but still current on interest were 1.52% of loans outstanding (Trepp via Yield PRO).
Can I use a bridge loan to pay off a balloon payment?
Yes, and it's a common, deliberate move. A bridge retires the balloon and gives you 6 to 24 months to stabilize occupancy, finish a value-add plan or wait for better permanent terms. It carries a higher rate than permanent financing.
Is a loan extension a good option for a balloon payment?
It can be a useful short-term step. It buys time on the current lender's terms and doesn't open your property to the wider market. Use it when a takeout is already underway, not as the plan.
What size loans does Northern Ridge Capital refinance?
Northern Ridge Capital places $5 million to $30 million in commercial real estate debt across multifamily, retail, industrial and other commercial property types, matching each maturing loan to the right source from a network of 700+ lenders and typically closing in 15–30 days once terms are set. We're a broker, not a lender, and we work commercial real estate only.
Next step
Run the example above with your own numbers: your balloon, your NOI and a current rate. If the loan your income supports is bigger than the balloon, you're refinancing. If it's smaller, you have 9 to 18 months to choose between a bridge, equity, a sale or an extension. Bring me the loan and the property and I'll map the paths against your timeline. For every refinance scenario in one place, see commercial property refinance.
Let's plan your balloon before it plans you.
Talk to Northern Ridge Capital →Northern Ridge Capital is a commercial mortgage brokerage (a broker, not a lender), arranging financing on commercial real estate only, not residential or owner-occupied consumer property. Justin Ashcraft, President · CA DRE #02093377. We work only within our licensed footprint. Structures and figures shown are typical or illustrative and are not a quote, offer, or indication of terms. Market data is drawn from third-party sources (the OCC Comptroller's Handbook, the Mortgage Bankers Association, the Federal Reserve, the U.S. Treasury, and Trepp via Yield PRO, as dated in the text). Nothing here is financial, legal, or tax advice.