The short answer: A commercial real estate (CRE) loan finances the purchase, refinance, or construction of income-producing or owner-occupied commercial property — office, retail, industrial, warehouse, mixed-use, or multifamily. Lenders size the loan on the property's value and income, typically lending 65%–80% of value, with terms that often include a shorter balloon (5–10 years) amortized over a longer schedule (20–25 years). Owner-occupied buildings can also be financed with SBA 504 or 7(a) loans, which allow lower down payments.
Whether you're buying your first building or refinancing an investment property, this guide covers the loan types, how lenders decide, and what to expect on rates and terms. To talk through a property, reach out or apply now.
Types of commercial real estate loans
- Conventional / commercial mortgage — the standard route for stabilized property; underwritten on income and value. See our commercial real estate loans.
- SBA 504 & 7(a) — for owner-occupied property (you use 51%+ of the space), with lower down payments and long terms. See SBA loans and 7(a) vs. 504.
- Bridge loans — short-term financing to buy quickly, reposition, or refinance while a property stabilizes. See bridge loans.
- Construction loans — ground-up development with a path to permanent financing. See construction loans.
- DSCR / investment loans — for investors qualifying on the property's cash flow. See DSCR loans explained.
How lenders evaluate a CRE deal
Commercial underwriting centers on the property, then the borrower. Key factors:
- Loan-to-value (LTV) — commonly 65%–80%, so plan for 20%–35% down (less with SBA).
- Debt-service coverage (DSCR) — many lenders want roughly 1.20x–1.25x+ so the property's income comfortably covers the payment.
- Property type, condition, and occupancy — stabilized, well-leased properties get the best terms.
- Borrower credit, experience, and reserves.
Rates, terms, and structure
Commercial loans are usually priced above residential mortgages and structured differently: expect shorter terms with a balloon (a 5-, 7-, or 10-year term amortized over 20–25 years), sometimes interest-only periods, and closing costs that include appraisal, environmental, and title. Owner-occupied SBA financing trades a longer, fully-amortizing term and low down payment for more paperwork. The right structure depends on whether you'll hold, sell, or refinance.
How Market Capital Lending helps
We arrange commercial real estate financing — conventional, SBA, bridge, and construction — through a network of 40–50 lenders, with 40+ years of experience and $375M+ funded. That range lets us match your property and plan to the lender with the right leverage, term, and pricing, instead of forcing it into one bank's box. Explore commercial real estate loans or start your application. (Rates, approval, and terms vary by credit, collateral, loan amount, and underwriting.)
Frequently asked questions
How much down payment do I need for a commercial property?
Commonly 20%–35% for conventional financing (65%–80% LTV). Owner-occupied SBA 504/7(a) loans can require significantly less.
What are typical commercial real estate loan terms?
Often a 5-, 7-, or 10-year term with a balloon, amortized over 20–25 years. SBA loans offer longer, fully-amortizing terms.
Can I finance an owner-occupied building differently than an investment property?
Yes. Owner-occupied property (you use most of the space) can use SBA 504/7(a) with lower down payments; pure investment property typically uses conventional or DSCR financing.
What is DSCR in commercial lending?
Debt-service coverage ratio — the property's net operating income divided by its debt payment. Many lenders want around 1.20x–1.25x or higher.
Can you refinance a commercial property?
Yes — including rate/term and cash-out refinances. The right option depends on your equity, income, and goals.