Commercial Lender Terms. What to expect?

7 Replies

I am looking to change my strategy from SFH and small Multiunits to more commercial properties of 4+ units. I have been in contact with a commercial lender and he gave me the following terms as a rough estimate on what I could expect for the loan.

70-75% LTV
5/1 ARM
Rate between 4.75% - 5.75%
20-25-year amortization

Is this generally the norm for these kinds of loans? Any insight on this would be greatly appreciated.
Thanks everyone.

Those are pretty average terms. Some require less down, some have fixed rates for shorter terms. Overall though, that's what to expect

You can get better terms as you get into larger loans.

@Jason DiClemente @Jeff Greenberg thanks for the reply gentleman.

How much does the interest rate typically go up or down from the index? With the way things are going I can only assume it will go up after the 5 years.

I've been getting around 4.25-4.75%, 20 yr amortization, rate readjusts at year 5 with balloon in 10 yrs. The better rates have typically come from my local banks familiar with the area.

Last month I got a 20 year am, mid 4s rate, 5 year balloon & 25% down. This was on a 20+ multifamily deal. With that said, every deal will be different depending on the borrower and property cash flow.

Good luck!

@Account Closed .  You asked about rate fluctuation from the index.. I assume you are talking about an Adjustable Interest Rate - but your original message appeared to be a fixed interest rate.   Adjustable Interest Rate Loans usually will require a Rate Cap Agreement, which is insurance against LIBOR exceeding a certain value; whereby if LIBOR exceeds a certain amount the Rate Cap Provider would pay the difference.  Hope that helps provide you some comfort. 

I was able to get 80% LTV, 10 year fixed, 20 year am last year. I pushed every bank to maximize the fixed term so I can lock in my numbers and get the building paid off.

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