Ask a bank for a home loan and the conversation is about you — your income, your credit, your debts. Ask for a commercial real estate loan and the conversation flips: it’s about the building. What it earns, what it costs to run, and whether the gap between those two numbers covers the mortgage with room to spare.
That flip confuses a lot of first-time commercial borrowers, so here’s the whole underwrite in three numbers.
Number one: NOI — what the property actually earns
Net operating income is the property’s rent and other income, minus everything it costs to operate — taxes, insurance, maintenance, management, utilities you cover, a vacancy allowance. Not the mortgage payment; that comes next.
Two things trip people up here. First, lenders underwrite real numbers, not hopeful ones: in-place leases beat projected rents, and a seller’s “pro forma” expense sheet gets rebuilt line by line. Second, the expense side is where deals quietly die. I spent twenty years running commercial-scale construction and rebuild projects before I started originating loans, and I can tell you the roof reserve, the parking-lot resurfacing, and the twenty-year-old rooftop units are real costs whether or not the listing sheet mentions them. An underwriter will find them. Better that we find them first.
Number two: DSCR — the coverage test
Debt service coverage ratio is NOI divided by the annual mortgage payment. Most commercial programs on our platform want to see at least 1.25x — the property earns a dollar twenty-five for every dollar of mortgage payment.
Run a quick example. A small retail strip nets $120,000 a year after expenses. At 1.25x coverage, the maximum annual debt service the deal supports is $96,000 — and that number, worked backward through the interest rate and amortization, is what actually sizes your loan. Not the purchase price. Not the appraisal. The income.
This is why two buyers can look at the same $1.4M property and get two different loan quotes: the building’s income sets the ceiling, and how the loan is structured against that ceiling is where a broker earns his keep.
Number three: LTV — your equity in the deal
Loan-to-value caps the loan against the property’s appraised value — up to 75% for most commercial property types on our platform, which means plan on roughly 25% equity. Whichever binds first, the DSCR ceiling or the LTV cap, sets your loan amount. On a strong-income property, LTV binds. On a thin-income property, DSCR binds — and no amount of down payment negotiation changes what the building earns.
What can actually be financed
More than most people expect. The Coast 2 Coast commercial platform runs to $20 million and beyond across a genuinely wide property list: office, retail, warehouse and industrial, apartment buildings, mixed-use, self-storage, hotels, restaurants, gas stations, auto services, assisted living, marinas, mobile home and RV parks, churches, agricultural land, and development projects. Around Ocala, the deals I see aren’t downtown towers — they’re the warehouse off the 484 corridor, the retail strip on Maricamp, the self-storage expansion, the horse-farm parcel with a development plan. Mid-size, slightly unusual, and exactly what the big banks quote slowest on.
And if your “commercial” deal is really a one-to-four unit rental, there’s usually a better tool: a DSCR investor loan qualifies on the property’s rent from a 1.0x ratio, with 20–25% down and the option to close in an LLC. Part of my job is putting the deal in the right lane before anyone writes an application fee check.
The file that closes
Commercial underwriting is document-heavy by design: rent roll, leases, two-to-three years of property financials, your personal financial statement, and — on value-add or development deals — budgets and contractor packages. That last part is home turf for me in a way it isn’t for most loan officers. Budgets, draw schedules, and contractor bids were my job for two decades. A commercial file assembled by someone who reads those documents the way the underwriter will is a file that closes without the six-week condition-list slog.
If you’re circling a property, send me the shape of it — type, price, and the income if it has any. I’ll tell you which lane it belongs in, what it takes to close, and whether the numbers work before you’re emotionally committed. Straight answers, seven days a week.