Commercial real estate loans typically require more inspection than residential mortgages. In evaluating applications for the commercial real estate loans, lenders consider several factors.
Depending on the lender and the type of real estate financing, these may include guarantees available, creditworthiness of the borrower, and certain financial ratios depending on the characteristics of the property.
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Borrowers may need to provide years of financial statements and tax returns. Lenders also may want to see the financial statements that indicate cash flow for the property to be financed.
The solvency : Most residential mortgages are made to individual borrowers, but commercial real estate loans are often made to business entities instead.
If the entity itself still has no credit history or financial rating, the lender may require company directors to secure the loan.
In commercial real estate loans, the minimum scores required individual FICO typically range from 550 to 700, depending on the lender and loan type.
Minimum credit ratings businesses vary depending on these factors and on what scale credit and credit reporting bureau the lender is using.
Coverage ratio Coefficients service: Another aspect that commercial lenders often consider when the maximum size is determined for a commercial real estate loan is the coverage ratio of debt service property.