FREQUENTLY ASKED QUESTIONS

  • CRE stands for Commercial Real Estate and refers to bank lending focused on income-producing properties.

  • CRE stands for Commercial Real Estate and refers to bank lending focused on income-producing properties.

  • A commercial loan is debt financing provided by a bank to a business entity for various business purposes. goes here

  • Risks of commercial lending include credit risk, market risk, collateral risk, interest rate risk, refinancing risk, liquidity risk, concentration risk, and regulatory/legal risk. 

  • The 5Cs of commercial lending are Character, Capacity, Capital, Collateral, and Conditions. 

  • Pros include access to significant capital and supporting business growth, while cons include a complex application process and strict eligibility requirements. 

  • Commercial mortgages differ from residential mortgages in borrower, property type, underwriting focus, loan terms, complexity, and recourse.

  • Common property types include multifamily, office, retail, industrial, hospitality, and mixed-use properties. 

  • Key financial metrics include Loan-to-Value (LTV) and Debt Service Coverage Ratio (DSCR), as well as borrower financial strength and experience. 

  • Life company correspondent lending involves insurance companies (life companies) providing commercial real estate loans through a network of approved third-party originators (correspondents). 

  • Advantages often include competitive interest rates, longer loan terms, and a focus on high-quality, stable assets.

  • A commercial mortgage banker can act as a correspondent, originating loans that meet the life company's criteria and submitting them for funding. 

  • Life companies often finance stable, income-producing properties such as apartments, office buildings, industrial facilities, and retail centers.

  • Typical loan terms can range from 10 to 30 years, often with fixed interest rates. 

  • Fees can include origination fees, servicing fees, and other transaction-based charges. 

  • Debt Yield is a metric calculated by dividing the property's Net Operating Income (NOI) by the loan amount, indicating the lender's initial cash-on-cash return if they took ownership. 

  • A commercial bank mortgage is a loan provided by a bank to finance income-producing real estate, such as office buildings, retail centers, industrial properties, or multifamily housing. These loans are typically secured by the property itself and come with specific terms based on the bank’s underwriting standards.

  • An appraisal contingency allows the borrower to withdraw from the loan if the property appraisal comes in below a certain value.

  • A Loan Commitment is a formal agreement from the lender to provide financing under specific terms and conditions. 

  • Due diligence includes reviewing property financials, leases, environmental reports, and legal documentation. 

  • Freddie Mac provides liquidity and stability to the multifamily rental housing market by purchasing and securitizing apartment building loans.    

  • Freddie Mac finances various multifamily properties, including conventional apartments, affordable housing, seniors housing, and student housing.  

  • Fannie Mae supports the multifamily housing market by purchasing and securitizing mortgages on apartment buildings through its DUS (Delegated Underwriting and Servicing) program.    

  • Fannie Mae offers fixed-rate loans, variable-rate loans, small balance loans, and affordable housing loans for multifamily properties.

  • Loan terms typically range from 5 to 30 years, with amortization up to 30 years for both Freddie Mac and Fannie Mae.

  • Both Freddie Mac and Fannie Mae may allow LTVs up to 80% for certain multifamily properties

  • The minimum DSCR requirements generally start around 1.20x to 1.25x for both agencies, but can vary.  

  • Most Freddie Mac and Fannie Mae multifamily loans above a certain size are non-recourse with standard "bad boy" carve-outs.    

  • Commercial mortgage bankers act as approved lenders or correspondents, originating and underwriting loans according to Freddie Mac's or Fannie Mae's guidelines.

  • Advantages include competitive interest rates, non-recourse options, and the stability of government-sponsored enterprises. 

  • A calculator is a helpful starting tool, but it cannot account for all the variables in a real-world transaction. We highly recommend calling SF Capital Group to get a tailored, accurate quote that reflects your specific situation.

  • Commercial loan rates vary depending on the loan type, property, borrower profile, and current market conditions. While online sources may provide general averages, SF Capital Group offers rates tailored to your unique situation.