What is the minimum down payment for a commercial real estate loan?
For conventional CRE loans, lenders typically require 25–35% down (65–75% LTV). For owner-occupied properties through SBA 504, the down payment can be as low as 10% with the SBA guaranteeing a portion of the loan. SBA 7(a) can also be used for CRE with as little as 10–15% down. Investment properties generally require more equity than owner-occupied.
What DSCR do I need for a commercial mortgage?
Most conventional lenders require a minimum DSCR (Debt Service Coverage Ratio) of 1.20x to 1.25x for stabilized properties. This means your property's net operating income must cover its annual debt service by at least 120–125%. Riskier property types like hotels require 1.40x. Credit tenant NNN leases may qualify at as low as 1.05x. DSCR is often the binding constraint — not LTV.
What is the current commercial mortgage rate in 2026?
As of May 2026, commercial mortgage rates start at 5.33% for highly qualified borrowers (selectcommercial.com). Conventional bank loans run 5.87–10.50%. Life insurance company loans — available for larger, high-quality properties — range from 4.34–7.59%. CMBS (conduit) loans offer non-recourse financing at competitive rates for stabilized income-producing properties. Your rate depends on property type, LTV, DSCR, borrower strength, and loan size.
How long does it take to close a commercial real estate loan?
Timeline depends on loan type. SBA 504 loans: 45–90 days from application to close. Conventional bank CRE loans: 30–60 days. Bridge loans: 2–4 weeks. CMBS loans: 60–90 days. The longest delays typically come from appraisal ordering (2–3 weeks), environmental reports, title searches, and underwriting queues at lenders. Bridge lenders can close faster for time-sensitive acquisitions.
What is the difference between a bridge loan and permanent CRE financing?
A bridge loan is short-term (12–36 months), higher interest, designed for value-add properties, transitional situations, or acquisitions that need renovation before qualifying for permanent financing. Permanent financing (permanent loans, CMBS, life company loans) is long-term (5–30 years) with amortization and lower rates, designed for stabilized income-producing properties. Many investors use bridge financing to stabilize a property, then refinance into permanent debt.
Can I use a CRE loan to buy the building my business operates from?
Yes — this is one of the best uses of a CRE loan for small business owners. Purchasing your own commercial space eliminates rent escalation risk, builds equity, and provides a tax-deductible interest expense. The SBA 504 program was specifically designed for this use case, offering 10% down, long terms, and competitive rates for owner-occupied commercial property.
What is CMBS financing and when does it make sense?
Commercial Mortgage-Backed Securities (CMBS) loans are non-recourse loans originated by lenders and sold into securities pools. They typically offer competitive rates for stabilized income-producing properties valued at $2M+. The main advantages: non-recourse (no personal liability if the property fails), competitive fixed rates, and no seasoning requirements for refinances. The main disadvantages: rigid prepayment structures (defeasance or yield maintenance), less flexibility for lease modifications, and lengthy closing timelines.
Does personal credit matter for a commercial real estate loan?
Yes, especially for smaller loans. Lenders prefer 720+ personal credit scores. Some lenders will work with scores as low as 650 for strong deals with substantial equity and excellent DSCR. For larger institutional loans, the property's performance and sponsor track record carry more weight than personal credit score. SBA programs use personal credit more heavily than conventional commercial lending.
What types of properties qualify for commercial real estate loans?
Most income-producing commercial properties qualify: office buildings, retail centers and strip malls, industrial warehouses and flex space, multifamily (5+ units), mixed-use developments, hotels and hospitality, self-storage, medical office buildings, and net-leased properties. Owner-occupied business properties (manufacturing facilities, medical practices, professional offices) typically qualify through SBA 504 or conventional programs.
What is a 'maturity wall' and does it affect my ability to get a CRE loan?
The maturity wall refers to the approximately $1.2 trillion in commercial mortgages maturing in 2025–2026 — originally written at an average rate of 4.91% that must now be refinanced at current 6%+ rates. This creates refinancing pressure for many existing borrowers who face significant increases in debt service. For buyers, this environment can create acquisition opportunities as distressed sellers look to exit. For refinancing borrowers, it increases importance of maximizing DSCR and LTV before approaching lenders.