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Commercial Real Estate Loan Criteria

Loan Criteria:

Loan Size - $200 K – $200 MM

Asset Types -  Retail, Industrial, Mixed Use, Hotel, Multifamily, Mobile Homes , Self-Storage etc.


Locations –  All Markets in USA


DSCR Typically –  1.25x +


Max LTV –  90% 


Term –  2 to 30 year fixed


Amortization  – 10-30 year, partial or full-term interest only available.


Origination Fees  – 0.5% to 2%.


Interest Rates – Treasury / SOFR Rates +

For a traditional commercial mortgage, the minimum down payment varies between 20% and 35% of the overall purchase price, depending on the lender. With SBA 7(a) and CDC/SBA 504 loans, the range is more standardized, falling between 10% and 15% of the purchase price.

Just as with home mortgages, banks and independent lenders are actively involved in making loans on commercial real estate. Also, insurance companies, pension funds, private investors and other sources, including the U.S. Small Business Administration’s 504 Loan program, provide capital for commercial real estate.

With commercial real estate, an investor (often a business entity) purchases the property, leases out space and collects rent from the businesses that operate within the property. The investment is intended to be an income-producing property.

But in general, commercial real estate loans tend to come at a steeper interest rate than a residential mortgage would. Businesses are just riskier to lend to, especially if you're just starting up. Plus, most businesses have less established credit histories than individuals.

If environmental insurance or an environmental assessment is required, you will be responsible for this one-time fee. You will be responsible for any mortgage or deed of trust filing fee imposed by a state or other taxing authority. Wells Fargo Bank will pay title policy costs, but you will be responsible for all other title-related closing or attorney fees and costs.Also, it’s less common with commercial real estate loans for the amortization schedule to match up with the repayment term. For example, you may get the option for five, 10 or 15 years to pay back your debt, but the amortization schedule goes as high as 30 years.

The most popular residential loan is the 30-year fixed-rate mortgage, CRE loans are typically shorter. The terms range from five years (or less) to 15 years, and the amortization period is often longer than the loan term. For example, a lender might provide a CRE loan with a term of seven years and a 30-year amortization. The borrower makes monthly payments during the seven years. The monthly payments are determined as if the loan were being paid off over 30 years followed by one final “balloon” payment composed of the entire remaining balance on the loan.

​While residential mortgages are typically made to individual borrowers, commercial real estate loans are often made to business entities (e.g., corporations, developers, limited partnerships, funds and trusts). These entities are often formed for the specific purpose of owning commercial real estate.Lenders consider the nature of the collateral (the property being purchased); the creditworthiness of the entity (or principals/owners), including three to five years of financial statements and income tax returns; and financial ratios such as the loan-to-value ratio and the debt-service coverage ratio when evaluating CRE loans.

That said, the NAR also found that just 60% of commercial real estate lenders used LTV as a criterion for determining how much a business can borrow. The remaining 40% used what’s called the debt service coverage ratio, or DSCR for short.

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