Getting Financing

Hello I’m new to this world of commercial RE, so I have what is probably my first of many dumb questions: What does is take to get financing for commercial property? How do you know how much you will qualify for? Is it more property-specific, unlike residential, where it’s based mostly on your income and credit score?

Thanks in advance,

:cool YES it can and is based on all the things you said !!! IT just is a matter of what broker or laon place you go to . I know of one that says if you have fico of 680 or more they will do a 100 % no doc commercial loans WOW !! SO as i said it all depends on who what and where you go


So would I need to go in with a specific property in mind, or is there some sort of pre-qualifying?

Most of the time lenders are more concerned about the property numbers and how much you have to put down. They prefer 20% but some will accept 5% to 10%. And as 001 said, some will do 100% funding. It all depends on how strong the building / project numbers are.

:cool YES you need to have a property or properties in the works !! AS the people i work with want to know about the property /// type value ect !!!

THEY are not just going to hand out a lump of money

FYI: there are programs where you can put as little as 3% down for up to $1million purchase. this loan is concerned with a borrower’s DTI moreso than DSCR. with this program, you could get pre-qualified prior to finding a property.

This program also requires owner occupancy…


Scott Miller

Something like that might work for us. How can I get more information about such programs?

Contact a commercial broker or direct lender. Shop around to make sure that you are getting the best program and terms.

Banks underwrite commercial deals first on the numbers of the property, and their particular guidelines.
Borrower’s Personal financials and experience usually come next and can sometimes be the deciding factor as to whether the lender makes a loan at all.

Some banks work with special government programs like SBA, HUD, USDA, etc. Others work with investors who buy Low income tax credits (LITC) and provide project equity, and still others offer mezzanine and equity participation requiring you to come in with very little money, if any.

If you’re developing a commercial property you’ll be dealing with a proforma or construction lender who will more than likely be lending you more than 100% of the current value of the property, but rarely more than 100% of the cost to build.

There are alot of great programs out there, especially for deals where the numbers make sense and the borrower has a good resume.

It’s always best to go to lenders with specifics. When you’ve got some hard numbers, post them here and i’m sure people will be willing to steer you in the right direction.

For your first property, you should start off with a small multi-family property and then move your way up to bigger properties.

For most multi-family loans, the lender will want to look at your debt to income as well as the income of the property. As a rule of thumb, most will want you to put 20% down plus have enough liquid assets for 2 months of P&I payments.


You so do not have to worry about credit. Go the and look at the big board, and just talk to some of those lenders.

Your credit is important to lenders. Some lenders rely more heavily on your credit/income than others on giving a loan. Your credit score as well as your personal financial statement can affect how much a lender will loan you as well as what type of interest rate you will get.

For instance a borrower with A+ credit can probably get a loan that is 1 - 2% lower in interest rate than a B- borrower (considering all other factors being equal).

Bottom line, having not so great of credit will not prevent you from a getting a commercial loan but it will affect how much you pay for it.