Commercial Real Estate Loan Guide

Commercial Real Estate Loan Guide

Commercial real estate (CRE) loans finance income-producing properties. They operate differently from residential mortgages — expect higher standards, longer timelines, and more documentation.

Types of CRE Loans

• For stabilized, income-producing properties
• Loan-to-value (LTV) typically 65-75%
• Terms of 5-20 years with 25-30 year amortization

• Ideal for owner-occupied commercial real estate
• Lower down payments (10% for owner-occupied)
• Fixed-rate financing with no balloon payments

• Short-term financing (1-3 years)
• For properties being renovated or repositioned
• Higher rates but faster approvals

Requirements

• Credit score: 680+ for conventional; 640+ for SBA
• DSCR: 1.20x minimum (net operating income / debt service)
• LTV: 65-75% conventional; up to 90% SBA 504
• Cash reserves: 6-12 months of debt service

What Makes CRE Deals Strong

• Long-term leases with creditworthy tenants
• Consistent cash flow
• Experienced sponsors
• Property in good condition with deferred maintenance resolved