Commercial Loan Overview
Commercial mortgage loans finance the purchase, refinance, or renovation of income-producing commercial real estate in California. Unlike residential mortgages, commercial loans are underwritten primarily on the property's net operating income (NOI) and debt service coverage ratio (DSCR), with the borrower's personal financial strength as a secondary factor. Eligible property types include office buildings, retail centers, industrial warehouses, mixed-use properties, apartment buildings with 5+ units, self-storage facilities, hotels, medical offices, and special-purpose properties.
California commercial mortgage rates vary by property type, location, borrower experience, and loan structure. Stabilized properties with strong tenants and long lease terms command the best rates. Value-add properties (those needing repositioning, renovation, or lease-up) typically use bridge or construction financing before refinancing into permanent commercial debt.
Commercial Loan Types
Permanent commercial loans provide long-term financing (5-30 year terms) for stabilized properties with proven cash flow. These include conventional bank loans, CMBS (commercial mortgage-backed securities) loans, life company loans, and agency loans (Fannie Mae/Freddie Mac for multi-family). Rates range from 5.5-8% depending on the product and property profile.
SBA loans (Small Business Administration 7(a) and 504 programs) finance owner-occupied commercial property with as little as 10% down. SBA 504 loans combine a bank loan (50% LTV), a CDC debenture (40% LTV), and a 10% borrower down payment, offering below-market fixed rates on the CDC portion. Maximum SBA loan amounts are $5 million for most programs and $5.5 million for manufacturing.
Bridge loans provide short-term (12-36 month) financing for properties in transition — renovation, lease-up, repositioning, or time-sensitive acquisitions. Bridge rates range from 7-12% with 1-2 origination points. The exit strategy (permanent financing or sale) must be clearly defined.
Commercial Loan Qualification
Commercial loan underwriting evaluates the property first and the borrower second. Key metrics include DSCR (most lenders require 1.20-1.35x), loan-to-value (typically 65-80% depending on property type), and the borrower's net worth, liquidity, and experience. Personal guarantees are required on most commercial loans under $5 million. Larger loans may offer non-recourse terms (the property is the sole collateral) for experienced borrowers with strong properties.
Documentation requirements include two years of property operating statements, a current rent roll, property tax and insurance records, the borrower's personal financial statement, two years of personal and entity tax returns, and an appraisal. Environmental Phase I assessments are required for all commercial transactions. Closings typically take 45-90 days depending on the loan type and property complexity.
Frequently Asked Questions — Commercial Mortgage Loans
What is a commercial loan in California?
A commercial loan finances income-producing property — multifamily of 5+ units, retail, office, industrial or mixed-use. Qualification rests on the property's net operating income and debt service coverage ratio, usually requiring 1.25 or better, rather than personal income. Expect 25-35% down, a 660 credit score, and 45-75 days to close. Most carry 5 to 10-year terms with a balloon payment rather than full amortization.
What credit score do I need for commercial mortgage loans?
Most commercial loan programs in California look for 660+. Credit tends to affect your pricing more than your eligibility — a stronger score usually shows up as a lower rate rather than a different answer on whether you qualify.
How much down payment do I need?
A commercial loan in California typically requires 25-35% down. The exact figure moves with your credit profile, occupancy and property type — stronger files land at the low end of that range.
How long does closing take?
A commercial loan in California generally closes in 45-75 days. Appraisal turn times and how quickly you return requested documents are the two things that move that timeline most.
Can I use this program for an investment property?
A commercial loan is available for investment and owner-occupied commercial. Occupancy affects both pricing and down payment, so confirm the intended use up front — it changes the terms you are quoted.
Are rates higher for commercial mortgage loans?
Commercial loan rates run roughly 1% to 2% above an owner-occupied loan, reflecting investment-occupancy risk pricing. Your specific number depends on credit, down payment, occupancy and the day you lock.
Do I need to verify my income?
For a commercial loan, income is qualified on property net operating income and debt service coverage. This is the main way the program differs from a standard conventional loan, and it is usually the reason borrowers choose it.
Can I refinance later into a different program?
Yes. With a commercial loan the usual path is to commercial loans typically balloon at 5-10 years and are refinanced then. Nothing locks you in — plan the exit when you take the loan rather than after.
What documents do I need to apply?
For a commercial loan you will need a government ID, credit authorization and property details, plus a rent roll, trailing 12-month operating statements and entity formation documents.
How do I get started?
Call (888) 703-1840 for a free commercial loan consultation, or use the form on this page. Pre-approval usually takes 1-3 business days, and there is no cost and no hard credit pull to find out what you qualify for.
Related Loan Programs
Last updated: July 2026. Sources: Federal Housing Finance Agency (FHFA), U.S. Department of Housing and Urban Development (HUD), Consumer Financial Protection Bureau (CFPB), California Department of Real Estate, California Association of Realtors. All loans subject to credit approval. Rates and terms subject to change.
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