· commercial · 3 min read
Everything You Need to Know About Commercial and Residential Loans
A comprehensive guide comparing all major commercial and residential loan types—DSCR, bridge, bank, agency, SBA, FHA, CMBS, and more. Discover which loan is right for your next investment.
Everything You Need to Know About Commercial and Residential Loans
Navigating the world of real estate financing can feel overwhelming. Whether you’re investing in your first rental property or scaling a commercial portfolio, understanding your loan options is the key to success. This guide breaks down the most important loan types—so you can choose the right path for your next deal.
Quick Comparison Table
| Loan Type | Best For | Key Features | Typical Property Types |
|---|---|---|---|
| DSCR Rental Loans | Investors scaling rental units | No income verification, fast closings, portfolio | 1-4 unit, multifamily, mixed |
| Bridge Loans | Short-term, value-add projects | Fast, flexible, asset-based, interest-only | Commercial, mixed-use, land |
| Bank Loans | Conventional, flexible deals | Recourse/non-recourse, personal touch, fast | All commercial, mixed-use |
| Life Insurance | Top-tier, stabilized properties | Long-term, low-rate, conservative underwriting | Office, retail, multifamily |
| Fannie Mae/Freddie | Large multifamily investments | Government-backed, high leverage, non-recourse | Multifamily (5+ units) |
| CMBS | Large, income-producing assets | Securitized, high leverage, non-recourse | Office, retail, hotel, multi |
| SBA 7(a)/504 | Small business, owner-occupied | Government-backed, low down, flexible use | Office, industrial, retail |
| FHA/HUD | Affordable, healthcare, multi | Govt-insured, high leverage, long amortization | Multifamily, healthcare |
DSCR Rental Property Loans
Best for: Investors who want to scale rental portfolios with minimal paperwork.
- Qualify based on property income, not personal income
- No cap on number of financed properties
- Fast closings, flexible terms
Bridge Loans
Best for: Short-term projects, acquisitions, or renovations.
- Fast, asset-based approval
- Interest-only payments
- Flexible use for acquisitions, renovations, or refinancing
Bank Loans
Best for: Investors seeking conventional, flexible financing.
- Recourse or non-recourse options
- Personal service, fast underwriting
- Suitable for all commercial property types
Life Insurance Company Loans
Best for: High-quality, stabilized commercial properties.
- Long-term, low-rate, conservative underwriting
- Non-recourse and assumable
- Large loan amounts
Learn more about Life Insurance Loans
Fannie Mae & Freddie Mac Multifamily Loans
Best for: Apartment and multifamily investors.
- Government-backed, high leverage
- Non-recourse, flexible terms
- Specialty programs for affordable, green, student, and senior housing
Learn more about Fannie Mae Loans | Learn more about Freddie Mac Loans
CMBS Loans (Commercial Mortgage-Backed Securities)
Best for: Large, income-producing commercial properties.
- Securitized, non-recourse, high leverage
- Standardized terms, less flexibility
- Prepayment penalties (yield maintenance, defeasance)
SBA 7(a) & 504 Loans
Best for: Small businesses and owner-occupied properties.
- Government-backed, low down payment
- Flexible use: real estate, equipment, working capital
- Long terms, competitive rates
Learn more about SBA 7(a) Loans | Learn more about SBA 504 Loans
FHA/HUD Loans
Best for: Affordable housing, healthcare, and large multifamily projects.
- Government-insured, high leverage
- Long amortization, low rates
- Strict property standards
Learn more about FHA/HUD Loans
Choosing the Right Loan
Every investor and project is unique. Consider your property type, investment goals, timeline, and risk tolerance. The right loan can help you scale faster, reduce costs, and protect your assets.
Ready to Find Your Best Loan?
Get a personalized quote and see your best options. Our team will guide you every step of the way.
Glossary
- DSCR (Debt Service Coverage Ratio): Measures property income vs. loan payments.
- LTV (Loan-to-Value): Loan amount divided by property value.
- Recourse/Non-Recourse: Whether the lender can pursue personal assets.
- Yield Maintenance/Defeasance: Prepayment penalties for some commercial loans.
- Amortization: The schedule for paying off principal and interest.
- Assumable: Loan can be transferred to a new owner.
- Government-Backed: Loans insured or guaranteed by a government agency.
This guide is for informational purposes only. For personalized advice, consult a lending specialist.
