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 from banks and other commercial mortgage lenders. They have gone by-the-way-side and the more traditional down payments of at least 20% to 25% are standard with few exceptions. (However, there are ways to obtain 100% financing I'll explain in a moment below. So keep reading.)

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%.

How To Buy Commercial Property With 100% Financing

Yes, you can buy commercial property with no money and without good credit by thinking “outside of the box.”

Here’s how to do it…

1. Use corporate cash credit
2. Use private lenders
3. Use social lending websites

You can use these strategies to raise 100% of the purchase price or just raise the down payment portion and combine that with the bank’s loan for complete leverage.

TIP: Use these strategies to also raise money for closing costs and rehab costs.
Learn more about these strategies here

4. Commercial short sales and pre-foreclosures

Snap up apartment buildings, retail, office, warehouse and other commercial property for pennies on the dollar…with 100% financing…without good credit.
Learn more about commercial short sales here