Commercial real estate encompasses a wide range of property types and uses, such as office buildings, retail properties, industrial, mixed-use properties, multifamily, and more.

Commercial mortgage rates are influenced by numerous factors, making it essential to understand the key determinants.

Some of these factors include:

• Property Type: The type of commercial property, such as office, retail, industrial, or multifamily, can impact your mortgage rate.

• Location: The property’s location plays a crucial role in rate determination, with different regions carrying varying rates.

• Loan-to-Value Ratio (LTV): Lenders consider the LTV ratio, which is the loan amount relative to the property’s value, as it affects risk assessment. Learn more about Loan to Value. 

• Debt Service Coverage Ratio (DSCR): Your property’s income-to-debt ratio affects the mortgage rate. A strong DSCR can lead to more favorable rates. Learn more about DSCR here.

• Debt Yield: Lenders also evaluate the property’s potential income against the loan amount to gauge risk. Learn more about debt yield here. 

• Borrower’s Financial Profile: Net worth, liquidity, credit rating, and level of experience in commercial real estate can impact your mortgage terms.