Conventional mortgages can be used for any property type. Maximum leverage can range from 75-85% (in limited circumstances and areas). Personal guarantees are typically required, but may be waived or limited on occasion, depending on the leverage and program.
Conduit mortgages are typically used for investment office, retail, large industrial, self-storage, flagged hotel, or commercial mixed use properties. Minimum loan amount is $2 million (although $3 million is preferred), maximum leverage is 75% and mortgages are always non-recourse with the exception of standard carve-outs. These mortgages are securitized and sold to investors, so they are highly structured with little room for change.
Insurance mortgages are typically used for investment office, retail, industrial, and strong flagged hotels on a very limited basis. Maximum leverage is usually 65-70% but can stretch to 75% in some cases. Most programs start at a $5 million minimum loan amount, but some can go lower and mortgages can be full, limited, or non-recourse except standard carve-outs.
FHA facilitates mortgages for hospitals or senior care facilities under its 202, 232 and 242 programs. Collateral is typically any hospital type, memory care facility, skilled nursing facility, or assisted living facility. Maximum leverage is 90% and all mortgages are non-recourse except standard carve-outs.
SBA facilitates 85-90% LTV mortgages for owner-occupied properties by guaranteeing them through its 7(a) and 504 programs. Collateral can be any type of commercial real estate (and/or capital equipment) as long as the sponsor(s) occupy over 50% of the property’s square footage. All SBA mortgages are full-recourse.
USDA guaranteed mortgages can be used for any commercial real estate collateral that is located in a designated rural area (with a population of less than 50,000 people). Maximum LTV is 90% under some programs, but most have a maximum of 80-85%. USDA mortgages are almost always full recourse.
Bridge mortgages are used for the light rehabilitation and/or stabilization of a commercial investment or owner-occupied properties. Cash flows are underwritten to pro forma numbers, but still must meet a 1.0x DSCR with the in-place cash net income. Loans are generally recourse for most programs.
Construction loans are for the ground-up construction or substantial rehabilitation of buildings that cannot service loans at a 1.0x DSCR. These mortgages are usually interest-only until stabilization at which point it will either convert to an amortizing loan or must be refinanced. Loan amounts and LTVs depend on the program under which the project is financed.
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