Start with the property’s actual use
The correct loan begins with what the property is and how it will make money. An apartment building held for rent is underwritten differently from an owner-occupied operating business, a mixed-use property, a winery, a gas station or a building under renovation.
A first-time commercial buyer does not always need years of commercial ownership, but the lender may compensate with stronger credit, more equity, reserves, management experience or a clearly documented operating plan.
- 5+ unit apartment or multifamily
- Mixed-use business and rental property
- Owner-occupied commercial building
- Winery, vineyard or hospitality property
- Retail, restaurant, gas station or special-purpose property
- Transitional or partially completed project
How much down will I need?
There is no single commercial down-payment rule. Stabilized conventional financing may require more equity than an eligible SBA owner-user structure. Bridge and private-money lenders may focus more heavily on collateral value or total project cost, but the rate and fees are normally higher.
Ahoo compares LTV, LTC, debt-service coverage, property income and the borrower’s available liquidity. Higher leverage, lower rate and fastest closing are different priorities and may not be delivered by the same loan.
Mixed-use and winery transactions need broader underwriting
A mixed-use property can combine an operating business with rental apartments, offices or retail suites. The lender must understand occupancy, lease income, business use and how much of the building is owner occupied.
A winery or vineyard may involve agricultural land, hospitality income, tasting-room use, equipment, inventory and an operating business. The financing plan should clearly separate real-estate value from business assets and identify whether commercial, SBA, bridge or private money is the better fit.
An eight-unit purchase currently closing
Ahoo is currently working with an experienced investor purchasing an eight-unit apartment building using remaining 1031 exchange proceeds after allocating part of the exchange to another property. The structure centers on the apartment’s income, the acquisition and the investor’s equity rather than a conventional employment-income calculation.
This transaction is currently closing and is not presented as funded until settlement is complete.
Related questions
What credit score is needed for a commercial loan?
There is no universal minimum. Credit requirements vary by conventional, SBA, DSCR, bridge and private-money program, and lower credit may reduce leverage or increase pricing.
Can I buy a commercial property without tax returns?
Potentially. Certain DSCR, stated-income, bridge and private-money programs may not rely on personal tax-return income, depending on property and transaction eligibility.
Can 1031 exchange funds be used toward a commercial purchase?
Potentially. A qualified intermediary and tax advisor should guide the exchange, while the lender documents the funds and transaction structure.