Commercial Real Estate Loan Basics

If your only experience with borrowing is a home mortgage, commercial real estate financing can feel like a different language. The core idea is similar — borrowing to acquire or refinance property — but lenders evaluate commercial deals through a different lens.

The property's income takes center stage

With a home loan, the focus is largely on you: your income, your credit, your assets. With commercial real estate, the property's ability to generate income becomes a central question. A lender wants to understand whether the building can support its own debt through the rent it produces.

That shift changes what documentation matters. Instead of just pay stubs, expect conversations about rent rolls, leases, and operating statements that show how the property performs.

Metrics you'll hear about

• DSCR (debt-service coverage ratio) — compares the property's net operating income to its debt payments. It's a quick read on whether the income covers the loan.
• LTV (loan-to-value) — the loan amount relative to the property's value, which speaks to how much equity is in the deal.
• NOI (net operating income) — income after operating expenses, before debt service.

Common loan purposes

• Acquisition — financing the purchase of an investment or owner-occupied property.
• Refinance — replacing existing financing, sometimes to improve terms or access equity.
• Bridge — shorter-term financing to cover a timing gap, such as between purchase and stabilization.

What to expect from the process

Commercial underwriting tends to involve more property-level detail and can vary widely by program, property type, and the strength of the deal. Terms are less standardized than residential, which is both a challenge and an opportunity — there's often room to structure financing around the specifics of your situation.

Because every commercial scenario is different, the most productive first step is to share the property and your goal so the numbers can be reviewed together. Availability always depends on the deal, eligibility, and underwriting.