Commercial Lending Gist

“Commercial mortgage lending underwrites the property's income, not the borrower's personal income. Net Operating Income (NOI), occupancy rates, and lease quality determine qualification — your personal tax returns are secondary to the asset's performance.”

“Commercial lenders use two primary metrics to size loans: DSCR (can the property pay the mortgage?) and debt yield (what return does the lender earn on their loan amount?). Both must pass minimum thresholds for the deal to work.”

“The rent roll — a detailed listing of every tenant, their lease terms, rent amount, and payment history — is the most scrutinized document in commercial lending. Strong leases with creditworthy tenants can improve your rate by 0.25-0.50%. Weak leases can kill the deal.”

“Most commercial mortgages have shorter terms (5-10 years) with 25-30 year amortization schedules — creating a balloon payment at maturity. This means you must refinance or sell at the end of the term. Understanding this structure is critical for long-term planning.”

“While commercial lending is asset-driven, the sponsor (borrower) still matters. Lenders evaluate your real estate experience, net worth, and liquidity. A strong sponsor package can improve terms, while a weak one can derail an otherwise solid deal.”