DSCR Loan for Commercial and Mixed Use Property Tear Sheet
| Loan Amount | $150,000 minimum. No firm maximum. |
| Loan Term | 30 Years |
| Coverage Area | Most States |
| Property Types Allowed | Mixed Use, Retail, Office, Warehouse, Industrial, Self Storage, Automotive (without underground storage tanks) |
| Borrower Income, Debt to Income Ratio (DTI ratio) Requirement | None |
| Property Level Cash Flow Requirement | None |
| Timeline to Close | 30 days reliably |
| Owner Occupancy | Allowed, for commercial space |
| Foreign National Borrowers | Allowed |
| Revocable Trust Owners | Allowed, pending review of Trust documents |
| Minimum FICO Score | 680+ FICO for 65–75 LTV. 550–679 FICO eligible at 50–60 LTV, without mortgage lates on credit. |
| Occupancy Requirement | For Refinance, no vacant commercial spaces allowed. For Purchase, vacant commercial OK for established retail/office/industrial owner occupant moving in. Some vacant apartment units OK for mixed use purchase or refi. |
| Recently Completed Property | Allowed, with leases and occupancy. |
| Purchase LTV | 70–75% of purchase price for mixed use with >50% residential.* 70–75% of purchase price for commercial and mixed use with <50% resi.* * cash to close = % of purchase price + buyer paid closing costs + tax and insurance escrows |
| Refinance LTV | 65–70% of appraised value |
| Ownership Seasoning Requirement for Refi | 6 months |
| Asset Requirements | 6 months of monthly payments to show in reserves |
| Credit Scoring for Multi Member LLC | Lender will pull credit for only 1 Member, and does not need to pull credit for every Member. |
| Individual Loans vs. Portfolios | Most common structure is a separate loan for each individual property. Multiple properties can be structured as multiple individual loans, a portfolio loan, or multiple portfolio loans. |
| Entity (LLC or Inc) vs. Individual Name Vesting | Most common is Entity (LLC or Inc) vesting. Some lenders in some states allow individual name vesting. For refis, borrowers can change ownership concurrent with the refi closing, as long as the majority individual owner stays the same. |
| Monthly Payment | Principal, Interest, Taxes, and Insurance (PITI payment) with 30 year amortization, similar to a home loan. |
| Interest Rates, Points, and Fees | Higher than DSCR loans for 1–4 unit residential rentals and multifamily |
| Prepayment Penalty | All programs have prepayment penalties |
| Appraisal | Commercial Appraisal Required |
| ✅ Commercial DSCR Loan Sweet Spots | 🏦 Commercial Term Bank Loan Sweet Spots |
|---|---|
| ✅ DSCR loan allows for a cash out refi where a bank won't meet on seasoning | 🏦 Bank already can meet on seasoning to approve requested cash out refi |
| ✅ Borrower not qualified for loan with full income and asset verification | 🏦 Borrower is qualified for a loan with full income and asset verification |
| ✅ Property is light on DSCR to meet full LTV requested | 🏦 Property meets more stringent bank loan DSCR requirements |
| ✅ Not a huge loan, where the convenience of a no doc loan is worth the additional interest | 🏦 Large loan, where the convenience of a no doc loan is not worth the additional interest |
| ✅ Quick close needed | 🏦 Borrower has all the time in the world to close a full doc bank loan |
Commercial and Mixed Use DSCR Loan Process
Step 1- Initial Discussion, Loan Application, and Term Sheet
- Discuss the purchase or refi scenario and property level details
- Suggest relevant loan programs and provide parameters
- Loan application and initial info request (we can get this over the phone too)
- Term Sheet and Appraisal Fee
Step 2- Initial Info Required for Commercial and Mixed Use DSCR Loan
- Any remaining info points to complete the Loan Application
- Photo of ID and void check
- Contact information for your title agent and insurance agent
- If borrower is an LLC, then LLC Operating Agreement and EIN Letter
- Bank statements with cash to close and required reserves for Purchases
Step 3- Appraisal, Title, Insurance, and Additional Info from Borrower
- Appraiser visits the property and completes the appraisal report
- Lender reviews the appraisal report, internally re-checks value and reviews for property condition
- Title agent provides title policy, works with lender on revisions and clarifications
- Insurance agent provides insurance policy, works with lender on revisions and clarifications
- Lender usually comes up with other things to ask for from borrower
Step 4- Final Underwriting, Closing, and Funding
- Lender sends complete file to underwriting, and they may find issues or require more things at that point
- Final coordination between title company and lender on loan docs and scheduling
- Closing and Funding
DSCR Loan for Commercial and Mixed Use Property Commentary
DSCR Loans for commercial and mixed use property are a veritable solution for refinancing and purchasing commercial property in a lending environment where banks have ever-tightening guidelines for these property types. Unlike DSCR loans for 1-4 unit residential properties, which are sold in the bond market, most DSCR loans for commercial and mixed use properties get sold to banks. The investor market for DSCR Loans for commercial and mixed use property is thinner than the market for DSCR loans for 1-4 unit residential properties and multifamily properties. The loans are perceived as riskier. As such, they come with a higher interest rate than DSCR loans for other property types and they almost always have a prepayment penalty.
Commercial DSCR loans have the highest interest rates for any of the DSCR loans we offer. The commercial DSCR interest rates get slightly better if you can settle for 50% of appraised value instead of full 65-75 LTV loans which have the highest interest rates, and for mixed use properties with > 50% of the square footage in residential use.
Nonbank Clearing Advantages
- Competitive rates and structures (multiple lender outlets)
- Familiar with commercial and mixed use DSCR loan underwriting and lender guidelines
- Excellent service and simplified loan processing
