How to Qualify for a Commercial Mortgage

What Commercial Mortgage Lenders Look for When Qualifying Borrowers and Determining Rate

  • Property location – Properties in large urban metropolitan areas are considered lower risk and are preferred.
  • Credit Score - Above 680 is preferred
  • Down Payment – 20%-25% down is expected, unless the property is owner occupied and we use the SBA small business programs
  • Qualifying Income – the property needs to show adequate cash flow to service the debt
  • Established tenants – A chain restaurant is more desirable then a generic restaurant
  • Do the majority of tenants have long term leases?
  • Is there a good history of stabilized occupancy?
  • Has lease turnover been kept to a minimum?
  • Is the property in good condition?
  • Lower leverage is better – Is your loan to value 80% or 50%?
  • What is the borrower’s net worth?
  • What is the borrower’s cash liquidity?
  • Does the borrower have experience managing property?

Who Are the Commercial Mortgage Lenders?

  • Commercial Banks
  • Local and Community Banks
  • Agency Lenders
  • Conduit Lenders
  • Insurance Companies
  • Credit Unions
  • Private Lenders

Commercial mortgage brokers have access to all of these lenders and that is why they can be a good choice in getting the lowest rate and best terms for a commercial mortgage loan.

Good Borrowers and Good Properties
While all of this information may seem complicated, it really comes down to this: good borrowers and good properties. If you are a borrower with a good credit score and assets and you are buying a property that is in good condition and in a good area there is a great chance that you will not only qualify for a loan but receive a favorable rate as well.

You can find more information on commercial mortgage loans here.