How to Finance a Commercial Property: A Simple Guide

Commercial real estate financing is fundamentally different from residential mortgage lending. Understanding the landscape helps you choose the right loan product and negotiate better terms.

Primary Loan Types

Agency Loans (Fannie Mae / Freddie Mac)

For multifamily properties with 5+ units. Best rates and longest terms available. Requires 75–80% occupancy for 90 days prior to close. Typical LTV: 65–75%. Typically 5–10 year terms with 30-year amortization.

Bank Portfolio Loans

For properties that don't qualify for agency financing (mixed-use, short operating history). Rates are slightly higher, terms shorter. Often requires a banking relationship.

Bridge Loans

Short-term financing (12–36 months) for value-add properties that need to be stabilized before agency financing qualifies. Higher rates (6–9%+) but flexible underwriting.

SBA Loans (Owner-User)

SBA 504 and 7a loans for owner-occupied commercial properties. As little as 10% down. Best for business owners purchasing their own facility.

Key Underwriting Metrics

• LTV (Loan-to-Value): Most commercial lenders require 25–35% down (65–75% LTV)
• DSCR (Debt Service Coverage Ratio): NOI ÷ Annual Debt Service. Minimum 1.20–1.25x required
• Interest Rate: Commercial loans are typically benchmarked to SOFR, Prime, or the 5/10-year Treasury

Samimi CRE Advisors works with a network of commercial lenders and can help connect you with the right financing for your deal. Contact us to get started.