Submitted by Naomi M on Wed, 12/19/2007 - 18:04.
90% LTV Commercial Mortgage Loans are Ideal for Many Types of Properties
Select lenders are providing commercial property owner-users 90% LTV commercial financing. The shake-up in the credit markets has made high leverage loans harder to come by.
Be advised that obtaining a 90% loan will have higher pricing than a more traditional 75% to 80% LTV loan. So think wisely before considering pursuing this type of commercial loan.
Business owner benefits
The option to own a commercial building with just a 10% down payment allows many more business owners to move from being a tenant to enjoying the benefits of property ownership including controlling operating costs, no landlord restrictions and real estate appreciation. This is a non-SBA loan.
Property types eligible for 90 percent commercial mortgage financing
Here are some typical property types eligible for this type of financing, although subject to change:
Automotive Repair, Body Shop
Bed and Breakfast (B&B)
Dry Cleaners
Funeral Home
Industrial
Mixed Use
Office, Office Condos
Retail / strip centers
Self-Storage
Warehouse
Qualifying Guidelines
There are some variables depending on the property type, but here a few key qualifications for a 90% LTV commercial real estate loan.
Credit: Minimum middle score of 600+ is typical.
Minimum of 2 years in business.
Income: Full Doc and Stated Income Programs
Minimum loan amount: $500,000. Depending on property type, loan amount can be as low at $250,000.
Some lenders will allow you to use all income sources. This means you can use the rental income from the commercial building as well as other income sources you have such as your employment income, retirement income, etc. This flexibility is ideal for commercial properties that do not cash-flow.
No state restrictions. This loan program is available in all 50 states.
FYI: If your credit score is currently too low to qualify, there are two primary methods used to boost your FICO score and raise your credit rating
[1] Improve your Debt-To-Credit Ratio
Your Debt-To-Credit Ratio is the total amount of debt in relation to your credit limit. For example, if you had $5,000 in high credit and you were $2,500 in debt on that $5,000, your debt-to-credit ration would be 50%. You want to get that figure down to a maximum of 30% and no less than 10%. The two ways to improve this ratio is to pay down your debts or increase your credit limit.
[2] Remove derogatory credit items from your credit report
Derogatory accounts on your credit report such as slow pays, hard inquiries, judgments, collections, repos, foreclosure, and bankruptcy are pulling your credit score down. You can legally remove these types of bad marks, even if they are yours, using the strategies explained in the Credit & Debt Solutions section of this website. I recommend The Credit Secrets Bible as your guide to improving your credit profile and boosting your credit score to 680 or higher.
Summary
Commercial property ownership is a viable goal with the loan programs currently available such as the 90% LTV commercial mortgage loan discussed in this article. If you are ready to apply for a commercial loan review the Commercial Loan Services section.
Be advised that obtaining a 90% loan will have higher pricing than a more traditional 75% to 80% LTV loan. So think wisely before considering pursuing this type of commercial loan.
Business owner benefits
The option to own a commercial building with just a 10% down payment allows many more business owners to move from being a tenant to enjoying the benefits of property ownership including controlling operating costs, no landlord restrictions and real estate appreciation. This is a non-SBA loan.
Property types eligible for 90 percent commercial mortgage financing
Here are some typical property types eligible for this type of financing, although subject to change:
Automotive Repair, Body Shop
Bed and Breakfast (B&B)
Dry Cleaners
Funeral Home
Industrial
Mixed Use
Office, Office Condos
Retail / strip centers
Self-Storage
Warehouse
Qualifying Guidelines
There are some variables depending on the property type, but here a few key qualifications for a 90% LTV commercial real estate loan.
Credit: Minimum middle score of 600+ is typical.
Minimum of 2 years in business.
Income: Full Doc and Stated Income Programs
Minimum loan amount: $500,000. Depending on property type, loan amount can be as low at $250,000.
Some lenders will allow you to use all income sources. This means you can use the rental income from the commercial building as well as other income sources you have such as your employment income, retirement income, etc. This flexibility is ideal for commercial properties that do not cash-flow.
No state restrictions. This loan program is available in all 50 states.
FYI: If your credit score is currently too low to qualify, there are two primary methods used to boost your FICO score and raise your credit rating
[1] Improve your Debt-To-Credit Ratio
Your Debt-To-Credit Ratio is the total amount of debt in relation to your credit limit. For example, if you had $5,000 in high credit and you were $2,500 in debt on that $5,000, your debt-to-credit ration would be 50%. You want to get that figure down to a maximum of 30% and no less than 10%. The two ways to improve this ratio is to pay down your debts or increase your credit limit.
[2] Remove derogatory credit items from your credit report
Derogatory accounts on your credit report such as slow pays, hard inquiries, judgments, collections, repos, foreclosure, and bankruptcy are pulling your credit score down. You can legally remove these types of bad marks, even if they are yours, using the strategies explained in the Credit & Debt Solutions section of this website. I recommend The Credit Secrets Bible as your guide to improving your credit profile and boosting your credit score to 680 or higher.
Summary
Commercial property ownership is a viable goal with the loan programs currently available such as the 90% LTV commercial mortgage loan discussed in this article. If you are ready to apply for a commercial loan review the Commercial Loan Services section.
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