Tuesday, May 11, 2021
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Phil Joseph
Branch Manager
Sr. Mortgage Loan Originator
Over 25 Years' Experience
American Pacific Mortgage
Rancho Bernardo Branch
11770 Bernardo Plaza Court #451
San Diego California 92128

Direct: 619.507.3558
Fax: 858.430.2557
Email: Phil@PhilJoseph.com
Website: www.PhilJoseph.com
NMLS# 249549
Company NMLS# 1850
 
Licensed in California by the Department  of Business
Oversight under the Residential Mortgage Lending Act 417-0015 
 
American Pacific Mortgage may not be the lender for all products offered on this website. Some loans may be made by a lender with whom American Pacific has a business relationship. Equal Housing Opportunity.
 
Phil Joseph
Branch Manager
Sr. Mortgage Loan Originator
Over 25 Years' Experience
American Pacific Mortgage
Rancho Bernardo Branch
11770 Bernardo Plaza Court #451
San Diego California 92128

Direct: 619.507.3558
Fax: 858.430.2557
Email: Phil@PhilJoseph.com
Website: www.PhilJoseph.com
NMLS# 249549
Company NMLS# 1850
 
Licensed in California by the Department  of Business
Oversight under the Residential Mortgage Lending Act 417-0015 
 
American Pacific Mortgage may not be the lender for all products offered on this website. Some loans may be made by a lender with whom American Pacific has a business relationship. Equal Housing Opportunity.

Commercial Underwriting Guidelines

Commercial real estate loan applications are underwritten on a case-by-case basis. Every loan application is unique and evaluated on its own merits but there are a few common criteria lenders looks for in a commercial loan application package.

Debt to Income ratio (DTI) – a borrower’s personal financial health is evaluated based on the current DTI. This ratio is calculated by dividing a borrower’s monthly debts by the monthly gross income and determines how much money the borrower has available for other monthly obligations.

Debt Service Coverage Ratio (DSCR) – equals net operation income (NOI) divided by the total debt service. It is a sophisticated ratio and is more thoroughly covered in the Debt Service Coverage Ratio (DSCR) article. Most lenders require that this ratio be greater than 1.00, which is considered “break even”. Each lender may have different policies and criteria for approving commercial loans. It’s always a good idea to have those conversations with a commercial loan officer prior to spending any money on costs associated with any loan application.

Loan-to-value ratio (LTV) – Commercial lenders typically require a larger down payment for commercial loans than for personal real estate, the rationale being that the borrower will be less likely to default on the loan if a significant percentage of the purchase price is in the form of his own personal funds, or the company’s funds. The maximum LTV a lender will consider may also vary and should be discussed prior to completing any loan application.

Property Analysis – The fair market value and fair market rents (if appropriate) will be evaluated based on the lender’s analysis of an appraisal. Depending on the property involved, factors that will be evaluated may also include the age, appearance, location, local market, and accessibility. Federal, state and local requirements for permits and licensing will also be considered. Special use properties may require additional underwriting. As always, be sure to discuss the lender’s underwriting practices early in the application process.