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Summary of Commercial Loans at 90%

Commercial loans at 90% though rare, are still an option. Owner occupants will have more 90% financing options than commercial real estate investors.90% Commercial Loans For InvestorsStraight 90% financing for investors, as far as we are aware no longer exists. 6 months to one year ago there were a few lenders that offered 90% financing but there rates where normally 1-3% higher than typical rates at 80% financing. The way investors still can structure 90% financing on investment properties is to have the seller hold a second lien position loan. Yes this might be obvious for you, but you should not just assume this is easy to get done. Most funding sources out there will not allow any type of second lien loans. So to find a bank that will allow this shouldn’t just be blown off.Besides just finding a bank will allow seller financing AND finding a seller that is willing to extend financing the property has to fit as well. In short the property has to be a bit of a “cash cow”. The market for purchase investment properties is set at 75% to 80% financing. Having the additional 10% to 15% of debt will often put a properties cash flow under water.In addition, banks will often raise their minimum Debt Coverage Ratio from say a 1.2 to a 1.3. And yes they will factor in the debt payments on both their loan and the seller second. So again the property has to be priced right with a high cap rate.90% Financing for Owner OccupantsBusiness owners have more options than investors for 90% financing. There are really three sources to buy a property with only 10% down. The loan program come in different structures for example the Commercial 30 Year Fixed, Five Year Fixed 7a Loan and the SBA 504 program will all allow the buyer to acquire commercial property with 90% financing.Each of these programs have their own pros and cons. For example the interest rates on the 5 Year Fixed 7a are the lowest and this loan program does not have any fees to do the loan. The Commercial 30 year Fixed boasts the longest fixed rates in the industry but the rates are the highest of the 3 options. The 504 loan is sort of in the middle with fixed rates often in 10 year range however the fees are more expensive than the other two options.