Commercial Real Estate
What Commercial Lenders Look For in a Deal
Commercial lenders underwrite three things together — the property’s income, the borrower’s strength, and the exit. Occupancy, lease quality, debt-service coverage, borrower liquidity and a credible repayment path matter more than any single number.
The property
- Occupancy and tenant quality
- Lease term and rollover risk
- Physical condition and deferred maintenance
The borrower
- Liquidity and net worth
- Experience with similar assets
- Clean, reconciled financials
The exit
Lenders want to see how the loan is repaid — from operations, a refinance or a sale. A deal without a credible exit is a deal that stalls.
Frequently asked questions
Does personal income matter?
On investor deals the property carries more weight; on owner-occupied deals the business does.
What is DSCR?
The ratio of property income to debt service — a key test for investor loans.