Commercial mortgages typically require larger down payments and shorter amortizations than residential financing — here's what actually changes, and why.
Budget for a larger down payment
Commercial financing typically requires 20–35% down, well above a typical residential minimum — confirm the real number for your property type and lender before you start touring.
Understand the property's own income will be assessed
For an income property, lenders look closely at the Debt Service Coverage Ratio (DSCR) — how comfortably the property's net income covers its own debt payments — alongside your personal financial position.
Expect a shorter amortization than residential
Commercial mortgages commonly amortize over 15–25 years rather than the 25–30 years typical residentially, which affects your monthly payment even at a similar rate.
Prepare for a personal guarantee, in many cases
Especially for a smaller business or newer investor, lenders often require a personal guarantee on top of the property itself as security.
Typically 20–35%, well above standard residential minimums, varying by property type and lender.
Lenders assess whether the property's own net income comfortably covers its debt payments, not just your personal income.
Commonly 15–25 years rather than residential's typical 25–30, which raises the monthly payment at a comparable rate.
Commercial appraisals lean heavily on the income approach (capitalized NOI), not just comparable sales.
Often required on top of the property as security, especially for smaller businesses or newer investors.
Book a free consultation with Narges to talk through your financing options, or ask HAI a question about the process.
