Across every commercial property type — retail, office, mixed-use, industrial — the qualification comes down to one core test: does the property’s income cover the debt? The asset type changes the details, but the underwriting spine is the same. Here’s what a commercial property loan actually asks of you.
The commercial property loan core test: coverage
The number at the center of every commercial property loan is the DSCR — debt-service coverage ratio. The lender takes the property’s net operating income and divides it by the annual debt payment. Commonly they want 1.20–1.25 or higher, meaning the income covers the payment with room to spare. Clear that, and the income side of the loan is there. Everything else supports this one calculation.
What builds the NOI
The NOI comes from the property’s actual performance: the rent roll and leases (or operating statements, for something like a hotel), minus real operating expenses with market-realistic vacancy, an approach the SBA also outlines. Lenders re-underwrite optimistic seller numbers, so the defensible NOI — not the marketing figure — is what sizes the loan.
What you bring
- Down payment. Commonly 25%–35%, driven by asset type, stability, and condition.
- Reserves. Several months of the payment, documented and accessible.
- The property’s records. A clean rent roll, leases, and operating history.
- Credit and a track record. Not the basis of approval, but they shape terms.
What you generally don’t need
Because the property qualifies the deal, income-based commercial loans typically don’t require the full personal tax-return documentation a conventional loan would. That’s what makes commercial investment financing accessible to self-employed investors, foreign nationals, and anyone whose tax returns understate their real financial picture.
A typical deal
A scenario I see often: an investor under contract on a commercial property with a solid rent roll. We rebuild the NOI with realistic vacancy and expenses, confirm it clears the coverage ratio at the loan amount they need, set the down payment and reserves, and size the deal. The property’s income did the qualifying — start to finish.
Have a commercial deal?
Whatever the asset type, the coverage test tells us fast whether it works. Tell us about your deal and we’ll run the numbers — in English or Spanish.
By Andres Jara — Alpha Equity Lending (NMLS #1855083). 20+ years in real estate finance, an MS in Finance, and an active South Florida investor and landlord.
