Terms: 5–10 yr, amortized over 20–30, often balloons. Recourse (personal guarantee) common under $5M; non-recourse above.
Loan Mechanics
Commercial Loan
Financing on income-producing property (5+ units or non-residential) — priced on NOI, LTV, and DSCR.
More in Loan Mechanics
- DSCR (Debt Service Coverage Ratio)— The ratio of a property's net operating income to its debt payments — a 1.25 DSCR means th…
- LTV (Loan-to-Value)— Loan amount divided by the property's appraised value, expressed as a percent.
- LTC (Loan-to-Cost)— Loan amount divided by total project cost (purchase + rehab).
- ARV (After-Repair Value)— The projected appraised value of a property after planned renovations are complete.
- DTI (Debt-to-Income Ratio)— Your total monthly debt payments divided by gross monthly income.
- APR (Annual Percentage Rate)— The all-in yearly cost of a loan, including interest rate plus most fees.