Lender · Nat'l Commercial Mtg Lender - Round Rock, TX · Member since 2014 · 916 posts · 235 votes
8y
@Gregory Ballard Loan amount is very important in what lending products are offered. If the loan amount is below $1MM, you most likely will get a 5 year fix with a 20 up to 30 year amortization. There are 30 year fixed rate with a 30 year amortization. Not not all lender's offer the 30 year fix, or if they do, it will have yield maintenance. Yield maintenance can be nasty if you sell your property prior to the 30 years. Many of the 5 year fix, 7 year fix and 10 year fix have a step down pre payment penalty.
Yield Maintenance is a prepayment penalty that, in the event the borrower pays off a loan before maturity, allows the lender to attain the same yield as if the borrower had made all scheduled mortgage payments until maturity.
If your loan amount is above $3MM (the numbers work best on $6MM), you might be able to get a FHA HUD loan. The FHA HUD rate can be fixed for 35 years or if there is construction/rehab it can be a 40 year fix. Like the single family FHA product, it will have insurance. HUD typically has a 10 year prepay but you can buy it down. Many do not use the HUD product for a purchase because the loan process is typically 4 months or more.
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
I’m not sure these type of commercial loans really exist. I may have seen one person say they got 30 year amortization on a one but definitely not 30 year fixed, 30 year amortization
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y
I've never found 30 year, fixed rate, fully amortized loans for commercial. That is, 5+ units for multifamily. Even a 30 year amortization period is long. You're chasing a unicorn.
Real Estate Broker · Philadelphia, PA · Member since 2014 · 159 posts · 108 votes
8y
@Gregory Ballard, it's uncommon (Usually I will see 5, 7 10 year terms), but it is possible to get a 30 year fixed rate from Fannie. Your property will most likely need to be in top condition, in a primary market, and have great cash flow history.
I just got a quote from an agency Lender yesterday: 80% LTV, 30 year fixed rate at 5.38% (Treasury + 230bps), 30 yr AM, 15 year Yield Maintenance, 1.25X DSCR. 5-50 units, $2-10MM range.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
8y
@Andrew Beauchemin is there a net worth requirement associated with those loans? What does "15 year yield maintenance" mean? Sounds like some sort of pre-payment penalty.
Real Estate Broker · Philadelphia, PA · Member since 2014 · 159 posts · 108 votes
8y
@Jon Holdman Generally on any Agency loan, the combined net worth of key principals (anyone with over 20% equity) will need to be greater than the loan amount.
Yep, you are correct, Yield Maintenance is a type of pre-payment penalty (as opposed to the 'Step-Down' structure)
Lender · Nat'l Commercial Mtg Lender - Round Rock, TX · Member since 2014 · 916 posts · 235 votes
8y
@Gregory Ballard Loan amount is very important in what lending products are offered. If the loan amount is below $1MM, you most likely will get a 5 year fix with a 20 up to 30 year amortization. There are 30 year fixed rate with a 30 year amortization. Not not all lender's offer the 30 year fix, or if they do, it will have yield maintenance. Yield maintenance can be nasty if you sell your property prior to the 30 years. Many of the 5 year fix, 7 year fix and 10 year fix have a step down pre payment penalty.
Yield Maintenance is a prepayment penalty that, in the event the borrower pays off a loan before maturity, allows the lender to attain the same yield as if the borrower had made all scheduled mortgage payments until maturity.
If your loan amount is above $3MM (the numbers work best on $6MM), you might be able to get a FHA HUD loan. The FHA HUD rate can be fixed for 35 years or if there is construction/rehab it can be a 40 year fix. Like the single family FHA product, it will have insurance. HUD typically has a 10 year prepay but you can buy it down. Many do not use the HUD product for a purchase because the loan process is typically 4 months or more.
Bedford, NH · Member since 2018 · 77 posts · 49 votes
8y
For Agency there is also typically a liquidity check in addition to net worth. As Karen mentioned, yield maintenance and defeasance can be onerous if trying to sell before the loan matures.
Investor · New Orleans, LA · Member since 2013 · 107 posts · 30 votes
8y
Called old capital lending Monday and was told I could possibly get a 10yr fixed with 30yr am purchase price of 1.2mill. It did not qualify for agency debt but said they know another lender who may be interested.