down-payment for loans over 3 Million

3 Replies

@Sal H.

$600,000 (if 20% down required) or $750,000 (if 25% required). Banks also  can require about 10% of cash reserve...all depends on how strong the deal is. Bank wants to make sure if something goes wrong, your able to back up property aka service the loan.

I tend to see more of the 25% down now....Also keep in mind, at closing you will be given credits/prorations for security deposits and taxes...That will cut down on the required cash at closing... on 30 units, maybe you'd get a tenant security deposit credit for say $25-30,000 (just a guesstimate for this asset, 100k a door its a lot so NOI must good (hopefully, assuming its a good deal) as well as location/condition of building)

And taxes are hard to estimate..But it prob will be another decent act of $ prorations.

On my last deal, I was required to put 20% down & it ended up being about 16% of liquid cash I had to pay at closing due to credits/prorations. 

Hi Sal,

Depends on the debt service coverage ratio. This ratio is the primary ratio banks use to determine the amount of debt a building can support. If you have recent historical income & expense data I can show you how to calculate.

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