Give Me a Rate for My Loan

Have you ever wondered why commercial rates are not readily published like residential rates. Are the lenders trying to hide something? When I ask for a rate quote the loan officer always answer my simple question with 10 more. Many people may feel this frustration but it is necessary. For residential lending the conforming programs all fit in a few boxes; convention, fixed, 15, year, 20 year, 30 year, FHA, VA etc. The type of properties are limited: Single Family, 2-4 unit, condo, etc. And the occupancy is limited to 3 categories, owner occupied, non owner occupied or second home. The is pretty much it. The residential mortgage lenders generally publish quotes for 30 year fixed rate conventional and FHA loans with 20% down payment. That is 80% of the market right there. Not so with Commercial Loans.

Types of Properties

Determines the risk of a deal so two properties side by side worth $2,000,000.00 with $1,000,000.00 loans against them from the same lending institution on the same day could have dramatically different terms because the different type of property.

Loan Amount

The rules are different for the type of properties. Multifamily rates get lower the larger the loan. For residential loans if the loan amount goes to jumbo status the rates are higher. For apartment buildings agency or conforming rates get lower with a larger loan. This is not necessarily so for other property types.

Occupancy Type

Because all commercial properties are for business purposes, a property is considered owner occupied when the owner operates a commercial business out of at least 50% of the square footage of the property. They will then potentially have lower rates than non owner occupied properties(sometimes).

Debt Service Coverage

The programs with the best rates require the property to be more profitable. That is determined by the ratio of income to the debt of the property. The programs with the best rates may require the 1.4 DSC. some programs only require 1:1 DSC which means the property can not be losing money. Those programs have higher rates.

Miscellaneous Criteria

Then there are criteria like occupancy level, stabilization, net worth, credit score, type of loan, term of loan, reserves and cap rate all affect your rate in some way, shape or fashion. So How can I or any lender give you a standard commercial rate. Such a thing does not exist. Therefore we mus play 20 questions to determine a rate. Then of course rates are subject to change without notice.

What are Commercial Rates Today March 26.

Assuming lots of variables you must contact me to get an exact quote for your deal but 5 year fixed rates are as follows:

Apartment Loans: under 750K 6.00% 750k to 3,000k 5.33% over 3,000k 5.19%

Portfolio Commercial: under 500k 7.00% over 500k 6.75%

Multi Use Commercial: 500k plus 6.69%

Special Use Commercial: 500k plus 7.44%

Church Loan: 500k plus 6.00%

Non Agency Apartment Loans: 500k plus 7%

SBA 504: 5.38% 20 year fixed

SBA 7a: 6.00%

Bank Bridge Loan: 7.50% interest only for 12 to 36 months

Hard Money Bridge Loan: 11%-14% Interest only 12 -36 months

Points, Fees, LTVs and other terms and conditions all have many different variables and if I needed to explain everything it would be at least 20 pages.

So this means you must play 20 questions with the commercial loan officer to get a preliminary quote and then submit a file to get a committed rate. Unlike residential who publish the rates an let you lock them commercial rates are not locked until you have an approval and maybe a commitment to lend.

So call me for a quote.