Commercial Mortgage

A commercial mortgage finances income-generating business property, featuring shorter terms, higher rates, and more stringent underwriting than residential loans, with approval based primarily on property cash flow rather than personal income.

Loan ParametersTypical Terms
LTV maximum50-65%
Interest rate1-2% above residential
Loan term10-20 years
Amortization20-25 years
Balloon paymentCommon at year 5-10
Underwriting FocusPrimary Criteria
Property NOINet operating income
DSCR1.35-1.5x minimum
Tenant qualityCredit strength and lease terms
LocationMarket fundamentals
Personal guaranteeUsually required
Documentation RequirementsAdditional to Residential
Business financials3 years audited statements
Rent rollCurrent tenant schedule
Operating expensesDetailed cost breakdown
Lease agreementsAll tenant contracts
Environmental reportPhase 1 assessment


Related Terms

DSCR LoanNet Operating Income (NOI)Commercial PropertyCapitalization Rate (Cap Rate)Capped Rate MortgagePersonal GuaranteeLoan-to-Value (LTV)

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