Funding for commercial properties like office buildings, retail spaces, multi-family housing, hotels, warehouses, and mixed-use developments can be complex, but the right lender relationship is key. BridgeWell Capital specializes in commercial real estate loans and has years of experience serving the needs of property investors, developers, and owners. Read on to find out more about the different types of commercial real estate loans BridgeWell Capital (commercial mortgage real estate loans Fort Worth TX)provides, current market rates, and how to apply.
In this article
Overview of Commercial Real Estate Loans
Commercial real estate loans are used to purchase, refinance, or construct income-producing properties that are not considered residential housing with four or fewer units. Typical commercial projects range from small retail shops and office spaces to large apartment buildings, hotels, and industrial complexes. The property itself generally secures the loans in addition to any existing or future revenue streams associated with it.
Types of Commercial Real Estate Loans
Several loan product types are offered, each geared towards a specific purpose with customized terms and qualifying guidelines.
Acquisition Loans
These medium-term loans aid buyers looking to purchase an existing property. The terms often range from 5-25 years with flexible repayment options.
Bridge Loans
Also known as swing loans, bridge financing provides short-term capital for 1-3 years to acquire or refinance a property. These loans are ideal for repositioning a distressed asset.
Construction Loans
Funds are disbursed in phases to finance the ground-up construction of commercial buildings and projects. Terms coincide with key milestones during development.
Mini-Perm Loans
Combines features of both construction financing and longer-term permanent commercial mortgages. Typically lasts 3-5 years to allow asset stabilization.
Refinancing Loans
Takes advantage of better terms, rates, or increased equity extraction from an owned property by replacing an existing mortgage. Cash-out refinancing unlocks capital for other uses, while rate-and-term refinancing lowers ongoing costs.
Blanket Loans
Single loan to finance multiple commercial properties owned by the same entity. Allows easy transfer of assets and provides flexibility.
Current Commercial Mortgage Rates
Interest rates and loan pricing is dynamic, reacting to macro conditions and risk profiles. Here are current commercial real estate loan rate ranges:
Construction Loans: 6.5% – 9%+
Bridge Loans: 7% – 11%+
Permanent Commercial Loans
- Acquisition Loans: 5.5% – 9%+
- Refinancing Loans: 6% – 8.5%+
To understand specifics, get a custom quote by speaking with a BridgeWell Capital advisor.
Qualifying for a Commercial Mortgage
These larger and more complex loans necessitate rigorous underwriting requirements. Below are key criteria used to qualify borrowers:
Transaction specifics: Loan purpose, property type, location, price, down payment amount.
Employment & Income: Proof to cover the mortgage, premiums, and other obligations.
Credit history & score: Typically, a 680+ FICO score is expected.
Assets & reserves: Documentation of post-closing liquid assets to cover unexpected costs equal to 6-12 months of loan payments.
Property financials: Existing occupancy rates, rents, and operational expenses. Profit and loss statements, recent rent rolls, and leases support them.
Projections: For construction/bridge loans, budgeting for development costs and returns.
Loan to Value (LTV) Ratio: The loan amount is about the appraised property value, with lower ratios preferred by lenders.
Debt Service Coverage Ratio: Measures the property’s generated net operating income against required loan payments with a larger cushion necessary.
Visit BridgeWell Capital’s website to use their loan calculator tools, which can provide estimates for your specific commercial real estate loan scenario.
How to Apply for Commercial Real Estate Loans
Follow this step-by-step process when seeking commercial mortgage financing:
- Determine needs – Consider what you want to accomplish, property types, optimal loan amount, and timeline.
- Organize documents – Financial statements, tax returns, property-related docs, etc. to support the application.
- Find a lender – Prioritize local/direct lenders like BridgeWell Capital, who can provide custom options.
- Complete loan application – Be prepared to provide detailed personal and professional information.
- Secure funding – Finalize loan terms after underwriting. Lawyers handle loan closing to transfer funds.
Expect this to be an intensive process with lots of information exchange between borrower and lender. Working with a knowledgeable and responsive commercial loan advisor makes the experience smoother.
