What LTV ratio do lenders require for a commercial mortgage?

Most commercial lenders require a loan-to-value (LTV) ratio of 75% or lower — meaning you need at least a 25% down payment. SBA 504 loans allow up to 90% LTV for owner-occupied properties. Conventional commercial mortgages typically cap at 70-75% LTV, and loans above 75% LTV will require PMI or higher rates. A lower LTV signals less risk to the lender and usually results in better terms.

What is DSCR and why do commercial lenders care about it?

Debt Service Coverage Ratio (DSCR) measures whether a property's income covers its debt payments. Formula: DSCR = Net Operating Income / Annual Debt Service. Most commercial lenders require a DSCR of 1.25 or higher — meaning the property generates 25% more income than the mortgage payment. A DSCR below 1.0 means the property can't cover its own debt, which is a hard stop for most lenders.

What's the difference between a commercial mortgage and a residential mortgage?

Commercial mortgages typically have shorter terms (5-20 years vs 30), higher down payments (25-35% vs 3-20%), higher interest rates (0.5-1.5% above comparable residential), and balloon payments are common — where the balance is due at term end even if the amortization period is longer. Commercial loans are also underwritten based on property income (DSCR) as much as borrower creditworthiness.

SmartBizCalc

Commercial Mortgage Calculator

Monthly payment, LTV, and DSCR with lender approval thresholds — so you know where you stand before you apply.

Property

Purchase Price ($)

Down Payment (%)

Annual Net Operating Income (NOI, $)

Gross rent minus operating expenses (excl. mortgage). Enter 0 to skip DSCR.

Loan Terms

Interest Rate (%)

Loan Term (years)

Payment & Loan Summary

Monthly payment—

Loan amount—

Down payment—

Total interest paid—

Total cost (principal + interest)—

Lender Approval Indicators

Loan-to-Value (LTV)

Lenders want ≤ 75%

—

Debt Service Coverage (DSCR)

Lenders want ≥ 1.25×

—

Payment is principal + interest only — does not include property taxes, insurance, or HOA. DSCR assumes the NOI you entered is stable. Lender requirements vary; SBA 504 loans may allow up to 90% LTV. Consult a commercial lender for your specific scenario.

Ready to grow your business? Capture every inbound inquiry automatically.

Try LeadLock Free →

You might also find useful: Small Business Loan Calculator · SBA Loan Eligibility Calculator · Business Acquisition Loan Calculator