Commercial Mortgage are loans secured by commercial properties. Typical properties requiring commercial mortgage financing are retail stores, offices, warehouses, gas stations, strip mall, and apartment buildings. Commercial mortgage is underwritten in a manner much different than residential loans.Often the underwriting of a commercial loan looks at what is called the Debt Service Coverage Ratio, or DSCR. This tells the investor what the property's ability to cover the debt load. Typically lenders look for a figure of 1.2 or better DSCR which essentially means that the property's income exceeds the expenses by 20%, and would be considered a performing, income producing property.
The qualifying criteria for commercial mortgages vary greatly depending on what type of commercial property you are trying to finace. For example, it is much more difficult to finance a resturant than an apartment building.
Depending on the state that you reside in, commercial mortgages are also available for any property that has 4 or more units on one lot.
Commercial mortgages come with their own guidelines and qualification requirements that differ from residential mortgages. It is best to contact a mortgage professional to discuss what options you may have regarding your unique property type.
