- No doc private bridge and DSCR for commercial
- Programs available for a wide range of property types
- Compare bank and private lender options
We have private debt and bank loan programs available for commercial and mixed use property loans. The spread between bank rates and DSCR rates is wider for commercial property types than it is for 1-4 unit residential, and the no doc bridge loans for small balance commercial do not include a rehab budget. The private lender loans would be used for convenience, speed, or because a bank said no. We also have banks that are competitive on rates and terms for commercial property loans.
Testimonials
What is a Commercial Real Estate Loan?
When we refer to “Commercial and Mixed Use Loans” we mean loans against property with commercial use, such as office, retail, warehouse, self storage, industrial, and automotive, or a mixed use of office / retail and residential.
Loans for 5+ unit multifamily properties, and 1-4 unit residential investment properties (except for conventional loans), are technically considered commercial real estate loans. The other pages on this website cover loans for residential property types.
In addition to banks and private lenders, there are life insurance companies, CMBS, and various other lender types for commercial real estate loans.
How to Qualify for a Commercial Real Estate Loan?
Commercial DSCR Loans vs. Commercial Term Bank Loans
| Commercial DSCR Loan | Commercial Term Bank Loan | |
|---|---|---|
| Loan Amount | $100k+ | $100k+ |
| Term | 30 years | 5, 10, 15, 20, or 25 years |
| Income and asset verification | No doc loan | Full income and asset verification required |
| Seasoning for cash out refi | 6 months | 6-24 months |
| DSCR Requirement | Varies, as low as 0.75 with 30 year amortization | Typically 1.20-1.25 with 20 or 25 year amortiation |
| LTV Requirement | 50-75% cash out refi 65-75% purchase |
65-70% cash out refi 65-75% purchase |
| Time To Close | 30 days | 40-60 days |
| Rates, Points and Fees | Higher rates, with lower rates for 50 LTV or properties with >50% of sq footage residential | Lowest rates available |
| Payment Escrows | Monthly payments include tax and insurance escrow | Taxes and insurance paid outside monthly payments |
| Occupancy Requirement | 70% | 70% |
| Minimum FICO Score | 620-680 minimum | 620-680 minimum |
| Owner Occupied Commercial Allowed | Yes | Yes |
| Rehab Budget | No | No |
Commercial DSCR loans have the highest interest rates for any of the term loans we offer, except for 1-4 unit residential DSCR loans for borrowers with low FICO scores. 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.
| 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 DSCR is available for a wide range of commercial property types including automotive shops without underground storage tanks, and self storage.
While no DSCR loans are available for a property where the owner resides for their personal residence, Commercial DSCR loans are available for both owner occupied businesses and properties that are leased out.
Private Bridge Loans for Commercial and Mixed Use Property
We offer private bridge loans for commercial and mixed use property, and work with banks that provide full doc commercial construction to perm loan loans.
| Private CRE Bridge Loan | Full Doc Bank Construction To Perm Loan (Value Add) | |
|---|---|---|
| Loan Amount | $250k+ | $250k+ |
| Loan Term | 12-36 months | 12-24 months construction loan converting to 5-25 year term loan |
| Max Leverage | 65-75% of purchase price | 65-75% of purchase price + construction hard cost |
| Time to Close | 30 days | 60 days |
| Borrower Income and Asset Verification, DTI | Recent bank statement only | Full doc loan, 2 years income and asset verification required |
| Experience Required | Yes | Yes |
| Rates, Points and Fees | Private bridge rates | Prime + 100 during construction and 5 year treasury + 275 perm, approximately |
| LTARV Requirement | 65% | 70% |
| Minimum FICO Score | 680 | 680 |
| Owner Occupied Commercial Allowed | By exception | Yes |
| Rehab Budget | No | Yes |
Private commercial real estate bridge loans are a convenient option for borrowers to close quickly and without the income and asset verification required by banks. For commercial property types, the private lenders will typically fund most of the purchase price and none of the rehab budget, or they will fund a low leverage refi for a property already owned to fund improvements. Banks are set up for commercial real estate loans that include a rehab budget, but are full doc loans that require 2 years income and asset verification and a track record.
Commercial Bank Term Loan Calculator
Bank loans for multifamily and commercial property are full doc loans, meaning they require 2 years personal and business income history, and the bank will verify assets (e.g. cash, stock, retirement plans, and other real estate owned). Unlike DSCR loans, banks typically do not escrow for property taxes and property insurance, so the monthly payment is just Principal and Interest (PI), as opposed to a DSCR loan payment which is Principal, Interest, Taxes, and Insurance (PITI). Typical amortization terms for bank loans are 20 years (240 months) and 25 years (300 months).
Up Front Costs
Bank loans have more stringent DSCR requirements than DSCR lenders.
Commercial DSCR Loan Calculator
Almost all DSCR loans are 30 year term, so we’ve plugged in 360 months for the term length.
For 1-4 unit residential, multifamily, and commercial / mixed use DSCR loans, the lenders escrow the estimated monthly cost for property taxes and property insurance. The monthly payments are PITI (Principal + Interest + Taxes + Insurance), like a 30 year home loan, even though these are commercial loan products.
Up Front Costs
In choosing a DSCR lender, rates, points, and fees are important, but equally important are service, reliability, and not finding a lender that bids low to win loans and re-trades later.
DSCR lenders have less stringent criteria than bank lenders. There is no income and asset verification required. DSCR loans for commercial and mixed use, typically require 70% occupancy. The usual dscr requirement for a DSCR loan is 1.00, based on rents divided by the PITI monthly payment with 30 year amortization, and we have lenders that can work with 0.75-0.99 dscr or lower for certain scenarios. A full doc bank loan would adjust rental income downward for operating expenses and vacancy (not just taxes and insurance) and require 1.20 or 1.25 dscr at 20 or 25 year amortization.
Commercial Loan Process
Step 1- Initial Discussion, Loan Application, and Term Sheet
- Discuss the loan scenario including rehab construction plan, costs, and end value
- Suggest relevant loan programs and provide parameters
- Scope of Work form and recent experience schedule (we can get this over the phone too)
- Loan application and initial info request (we can get this over the phone too)
- Term Sheet and Appraisal Fee (if required)
Step 2- Initial Info Required for Commercial Loan
- Loan Application and Appraisal Fee if required (see previous step)
- 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
Step 3- Appraisal, Title, Insurance, and Additional Info from Borrower
- Appraiser visits the property and completes the appraisal report or borrower submits photos for lender (for our lenders that do desktop appraisal).
- Lender reviews the appraisal report, internally re-checks value and reviews for property condition, or completes internal valuation (desktop appraisal).
- 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
Commercial and Mixed Use Loan Requirements
- Loan Application
- Schedule of Real Estate Owned
- LLC documents including Operating
- Agreement (if applicable)
- Title Policy meeting lender requirements
- Insurance Policy meeting lender requirements
- Leases
- Last 12 months and projected
- Operating Expenses
- Purchase contract (if purchase)
- HUD1 from purchase (if purchased recently)
- Summary of work completed to date at the property (if applicable)
- Completed appraisal (ordered by lender, paid for by borrower)
- Environmental study (ordered by lender, paid for by borrower)
- Commercial DSCR Loan or Private Bridge Loan: No income verification required. In some cases, a recent bank statement is required
- CRE Bank Loan or Commercial CTP Loan: 2 years business and personal income, asset verification, and experience verification, required
Nonbank Clearing Advantages
- Compare bank and private lender bridge and term options for any scenario
- Familiarity with commercial property underwriting and lender guidelines
- We can help close loans that commercial banks are not funding
