Knowing how much of a down payment is needed to purchase a commercial property is critical. Many funding sources in recent months have made their qualifying criteria more stringent (ie, more traditional) due to the credit crunch that has occurred.

For example:
1. Select lenders were financing multifamily housing with just 10% down.
2. Select lenders were financing owner-occupied commercial property such as office or retail with just 3% down.

These highly leveraged loans are no longer available. They have gone by-the-way-side and the more traditional down payments from 20% to 25% are standard with few exceptions.

Low down payment exceptions:
If you are an owner-user, occupying 51% or more of the property, it is possible to leverage into a purchase with just 10% down using SBA-insured financing for small business owners.

Refinance loans:
Refinance loans for the most common property types can have LTVs similar to purchase loans. Your loan scenario will influence the lender’s decision.

Hard money and bridge loans:
You should expect lower LTVs for hard money and bridge loans depending on the property type and scenario from 50% to 75%.

Special use property:
You should expect lower LTVs for special use property from 65% to 75%.

The table below will help you determine the down payment requirement for the most popular property types that have “stabilized rents.”