Best Commercial Mortgage for November 2026
Discover the best commercial mortgage options for your business. Compare top-rated lenders offering competitive rates and flexible terms to help you finance your next property investment or expansion.
The Annual Percentage Rates (APR), loan terms, loan amounts, origination fees, and other features shown are estimates only and may not reflect the actual terms available to you. Estimates are based on information you provide, offers from lending partners, and publicly available data. Your actual terms will depend on your business’s financial profile, credit history,
What is a commercial mortgage?
A commercial mortgage is a loan used to buy, build, or refinance income-producing or owner-occupied business property. The property itself serves as collateral, and most commercial mortgages run 5 to 25 years with amortization stretched over 15 to 30 years.
Commercial mortgages fund a wide range of property types: office buildings, retail centers, warehouses, multifamily apartments, mixed-use developments, restaurants, medical buildings, hotels, and self-storage facilities.
Unlike a residential mortgage, qualification depends heavily on the property's income potential, not just the borrower's credit. Lenders evaluate the deal first, the borrower second.
How does a commercial mortgage work?
Commercial mortgages share the basic structure of residential mortgages: a lender provides the bulk of the purchase price, the borrower contributes a down payment, and the loan is repaid with interest over time. But the mechanics differ in several important ways.
Down payments are larger, typically 20% to 35%, compared to as little as 3% for residential. Loan terms are shorter, often with a balloon payment due at the end of a 5, 7, or 10-year term even though the loan amortizes over 20 to 30 years.
Most commercial mortgages also include a debt service coverage ratio (DSCR) requirement, meaning the property's net operating income must exceed loan payments by a healthy margin. Lenders typically want DSCR of 1.20 or higher.
Interest rates run higher than residential rates, and underwriting is more rigorous. Lenders review the property's income, tenant quality, location, condition, and projected cash flow, alongside the borrower's credit, business financials, and experience.
Types of commercial mortgages
Commercial mortgages come in several flavors, each suited to a different property type, borrower profile, and use case. Choosing the right one starts with whether the property will be owner-occupied or treated as an investment.
| Loan type | Typical down payment | Term | Best for |
|---|---|---|---|
| SBA 504 | 10% | 10–25 years | Owner-occupied, lowest down payment |
| SBA 7(a) real estate | 10%–15% | Up to 25 years | Owner-occupied with working capital needs |
| Conventional commercial | 20%–35% | 5–25 years | Investment properties, established borrowers |
| CMBS (conduit) | 25%–35% | 5–10 years | Larger loans, non-recourse, stabilized properties |
| Bridge loan | 20%–35% | 6 months–3 years | Short-term, value-add, fast closing |
| Hard money | 25%–40% | 6 months–2 years | Distressed properties, fast funding, credit issues |
SBA 504 loans
The SBA 504 program is the most common path to commercial real estate for owner-occupied business property. Down payment is as low as 10%, structured as a three-party loan: 50% from a conventional lender, 40% from a Certified Development Company (CDC), and 10% from the borrower.
The 504 program caps the SBA-backed portion at $5.5 million ($5.5M for green/manufacturing, $5M standard). Property must be at least 51% owner-occupied for existing buildings, 60% for new construction.
SBA 7(a) for real estate
SBA 7(a) loans can also fund commercial real estate, with terms up to 25 years for real estate purchases. Maximum loan size is $5 million, and down payment is typically 10% to 15%.
One advantage: 7(a) can combine real estate, equipment, and working capital in a single product. See more on the broader SBA loan options for the full 7(a) breakdown.
Conventional commercial mortgages
Conventional loans from banks, credit unions, and life insurance companies are the standard for investment properties. Terms are typically 5 to 25 years with 20- to 30-year amortization and a balloon payment.
For smaller commercial deals, especially mixed-use properties under $500,000, some borrowers also explore personal loans as a supplement to the down payment. The math only works for strong personal credit; see how personal loans work before considering this path.
CMBS and bridge loans
CMBS loans (also called conduit loans) are pooled and sold as securities. They typically offer non-recourse terms but stricter property requirements and prepayment penalties.
Bridge loans cover short-term needs, acquisitions, repositioning, or stabilization before refinancing into long-term debt.
Pro Tip
If you'll occupy at least 51% of the property, run the numbers on SBA 504 before considering conventional. The 10% down payment requirement (vs. 25%–35% conventional) frees up substantial capital for the business itself.
The tradeoff is a longer closing timeline, typically 60 to 90 days for SBA 504 versus 30 to 45 days for conventional.
Commercial mortgage vs. residential mortgage
The two products share a name, but the underwriting, terms, and use cases are fundamentally different. Confusing them is a common mistake among first-time commercial borrowers.
| Feature | Commercial mortgage | Residential mortgage |
|---|---|---|
| Down payment | 20%–35% typical | 3%–20% typical |
| Term | 5–25 years with balloon | 15 or 30 years, fully amortized |
| Interest rate | 0.5%–2% higher than residential | Lower, more standardized |
| Qualification basis | Property income + borrower credit | Borrower income + credit primarily |
| DSCR requirement | 1.20+ typical | None |
| Recourse | Recourse standard, non-recourse possible | Non-recourse in most states |
| Prepayment penalties | Common (defeasance, yield maintenance) | Rare |
Commercial mortgage rates and fees
Commercial mortgage rates are tied to the prime rate, the 10-year Treasury yield, and the borrower's risk profile. As of early 2026, with the prime rate at 6.75%, typical APR ranges look like this:
- SBA 504: Fixed rates roughly 6%–8%, depending on portion
- SBA 7(a): Prime + 2.25%–4.75% (variable)
- Conventional bank loans: 7%–10% depending on property type and LTV
- CMBS loans: 6%–9% for stabilized institutional-quality properties
- Bridge loans: 8%–12%
- Hard money: 10%–15% with 2–5 points origination
Beyond interest, commercial mortgages carry substantial closing costs.
- Origination fee: 0.5%–2% of loan amount
- Appraisal: $2,000–$10,000+ for commercial properties
- Environmental assessment (Phase I): $1,500–$5,000
- Title insurance: Typically required, varies by state
- Survey, legal, and recording fees: $2,000–$10,000 combined
- Prepayment penalties: Often substantial, review carefully
Commercial mortgage requirements
Underwriting is more involved than residential, and lenders scrutinize both the property and the borrower. Most evaluate the same core factors:
- Down payment: 10% for SBA, 20%–35% for conventional
- Loan-to-value (LTV): 65%–75% maximum for most conventional loans
- DSCR: Net operating income must exceed loan payments by at least 1.20x
- Personal credit: 680+ typical, with stronger pricing above 720
- Business credit and time in business: 2+ years standard
- Net worth and liquidity: Many lenders want net worth equal to loan amount and post-closing liquidity of 9–12 months of payments
- Property type and condition: Stable, income-producing properties get better terms than value-add or specialty assets
- Personal guarantee: Standard except in non-recourse CMBS
Documents typically required:
- Two to three years of business and personal tax returns
- Personal financial statement and schedule of real estate owned
- Property financials (rent rolls, operating statements, lease summaries)
- Purchase agreement or refinance loan documents
- Business plan or property business plan
- Bank statements for both business and personal accounts
- Entity documents (articles of incorporation, operating agreement)
Existing banking relationships can help. Borrowers with established business checking accounts and healthy reserves in business savings at the same institution often receive faster decisions and stronger pricing on commercial mortgages.
How to get a commercial mortgage
Pro Tip
Always run the math on prepayment penalties before signing. CMBS loans use defeasance or yield maintenance penalties that can cost 5%–15% of the loan balance if you exit early.
If there's any chance you'll refinance or sell within 5 years, an open-prepay conventional or SBA loan often beats a slightly lower-rate CMBS deal once exit costs factor in.
Property types that qualify for commercial mortgages
Most commercial mortgage lenders fund a range of property types, but terms and qualification vary widely by category.
- Multifamily (5+ units): The most heavily lent category, with the most competitive rates and longest amortizations.
- Office: Class A in primary markets is well-financed; Class B/C and suburban office have tightened post-pandemic.
- Retail: Necessity retail (grocery-anchored, medical) finances easily; experiential and big-box are tougher.
- Industrial and warehouse: Strong lender appetite, especially for last-mile distribution and flex space.
- Mixed-use: Common in urban infill, commercial first floor, residential above.
- Hospitality: Hotels and motels typically require specialized lenders and higher rates.
- Self-storage: Stable cash flows attract favorable terms from specialty lenders.
- Owner-occupied (any type): Best terms via SBA 504 or 7(a).
If a commercial mortgage isn't the right fit for your situation, alternatives worth considering include a business term loan for smaller property buys, a business line of credit for renovations and improvements, accounts receivable financing if cash flow is the actual constraint, merchant cash advances for businesses with strong card revenue, or business credit cards for ongoing property expenses with rewards.
For real estate investors who own a primary residence and want to access equity for commercial deals, home equity lines of credit can sometimes provide the down payment funds. Newer business owners may also want to explore startup capital options before committing to a long-term mortgage.
Pros and cons of a commercial mortgage
Frequently asked questions
How much down payment do I need for a commercial mortgage?
Down payment typically runs 20% to 35% for conventional commercial loans. SBA 504 loans allow as little as 10% down for owner-occupied property. Bridge and hard money loans usually require 25% to 40% depending on property condition and borrower credit.
What credit score do I need for a commercial mortgage?
Most commercial lenders look for 680 or higher personal credit. Top pricing typically starts at 720+. Some specialty lenders work with 600+ borrowers but at higher rates and lower LTV. Business credit and property cash flow can offset lower personal credit in some cases.
How long does it take to close a commercial mortgage?
Conventional commercial mortgages typically close in 30 to 60 days. SBA 504 and 7(a) loans usually take 60 to 90 days due to additional documentation and SBA review. Bridge and hard money loans can close in 7 to 21 days for time-sensitive deals.
Are commercial mortgage rates higher than residential rates?
Yes, commercial rates typically run 0.5% to 2% higher than comparable residential mortgages. The premium reflects more complex underwriting, shorter terms, higher LTV risk, and lower deal volume compared to residential lending.
Can I get a 30-year commercial mortgage?
True 30-year commercial mortgages are uncommon. Most commercial loans have 5- to 10-year terms with 20- to 30-year amortization and a balloon payment. SBA 504 loans for real estate amortize up to 25 years without a balloon, which is as close to a 30-year commercial mortgage as most borrowers will find.
What's a commercial mortgage broker, and do I need one?
A commercial mortgage broker shops multiple lenders and structures deals on behalf of borrowers. They're most useful for complex deals (mixed-use, specialty properties, value-add), borrowers with credit or income challenges, or larger loans where access to specialty capital sources matters. For straightforward owner-occupied or stabilized investment deals, going direct to a bank or SBA lender often works fine.
Can I refinance my commercial mortgage?
Yes, commercial refinancing is common, especially as balloon payments come due. Rate-and-term refinances secure better pricing or extend the loan, while cash-out refinances pull equity for additional investments. Refinancing typically requires the same underwriting as a purchase, including new appraisal, environmental review, and DSCR calculation.
Key takeaways
- Commercial mortgages finance income-producing or owner-occupied business property, with terms typically 5–25 years.
- SBA 504 allows 10% down for owner-occupied property, the lowest entry point for commercial real estate.
- DSCR (1.20+ typical) is the underwriting test that matters most.
- Down payments run 20%–35% for conventional loans, with 25%–35% LTV typical on investment properties.
- Rates run 0.5%–2% higher than residential mortgages.
- Closing costs are substantial, budget 3%–6% of loan amount.
- Most loans have balloon payments, plan exit strategy before closing.
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