Investor · Dover, DE · Member since 2018 · 16 posts · 0 votes
We are looking for a multifamily property to buy. I know that 2-4 doors is considered a personal mortgage and five plus is commercial. My question is about criteria to qualify for a commercial loan. What are the standard criteria? Down payment percentage ?
We are looking for a multifamily property to buy. I know that 2-4 doors is considered a personal mortgage and five plus is commercial. My question is about criteria to qualify for a commercial loan. What are the standard criteria? Down payment percentage ?
Usually 5+ units requires 25% down. You may be able to find 20% down, but the rate will be higher. Some portfolio lenders don't require income verification and base the loan on guarantor's credit and the asset.
Rental Property Investor · York, PA · Member since 2017 · 58 posts · 41 votes
7y
@Amy Yarnall at least in my area and other areas ive been looking to invest you are generally looking at 25% down as @Stephanie P. said and usually 3, 5 or 7 years fixed on a 20 year amortization.
As far as qualifying, they take your personal financial situation into account as well as the property and what income it will produce. I have found that the larger the property the more the financials of the property are important but you (or someone in the deal) will still need to meet the net worth requirements.
@Amy Yarnall at least in my area and other areas ive been looking to invest you are generally looking at 25% down as @Stephanie P. said and usually 3, 5 or 7 years fixed on a 20 year amortization.
As far as qualifying, they take your personal financial situation into account as well as the property and what income it will produce. I have found that the larger the property the more the financials of the property are important but you (or someone in the deal) will still need to meet the net worth requirements.
Hope this helps!
John
Actually, 30 year fixed is available. I initially said you may be able to find 20% down.
Rental Property Investor · York, PA · Member since 2017 · 58 posts · 41 votes
7y
@Stephanie P. do you know of 30 yr fixed products available on commercial properties (excluding large apartment buildings over $1m)? I have only been able to get 30 yr fixed for 2-4 unit properties. If there are lending institutions that will do that could you message me their information as I would love to reach out.
Multifamily investor · Boston, MA · Member since 2017 · 281 posts · 521 votes
7y
@Amy Yarnall - in order to qualify for a loan, you (or a key principle) will need to have net worth = loan amount, and liquidity = 12 months of debt payments.
Specialist · Plano, TX · Member since 2019 · 29 posts · 22 votes
7y
@Amy Yarnall DCR is one of the things that banks will look for 1% or 1.25% ideally, when it comes to downpayment it depends on your strategy, have to make sure that you are not overleveraged or underleveraged.