Application Requirements

Loan Process

Click on each sub-heading below for more details. Click on the links to download forms.

The Commercial Mortgage Industry, unlike with residential mortgages, does not have a standardized application form. For this reason, we will not ask you to complete a Form 1003 or similar document as part of the initial application process. Each funder has its own application, but we won't bother with their forms until we underwrite the loan and choose a program and funder. The SBA, USDA, Fannie/Freddie do have some standard forms, which we will help you complete along the way, if applicable.

For most transactions, we can start the process if we receive at least the following pieces of information:

Property Details from the offering flyer (provided by listing agent) on purchase transactions or from public data on refinance transactions.
Personal Financial Statement (PFS) from each owner/borrower including Schedule of Real Estate Owned
Business Financial Statements (2-3 years & YTD or T-12 - Trailing 12 months)
Personal & Business Tax Returns (2-3 years if bank or agency loan)
Rent Roll for the subject property if not 100% owner-occupied - Commercial or Multifamily
Credit Report (Soft Pull)
Most recent mortgage statement for refi transactions
Three months' bank statements to show down payment and cash reserves (90-days seasoned)

The information above will usually give us enough details to put together a tentative application package. We will also need to know the transaction details, such as purchase price, loan amount, purpose, etc.

Keep in mind that most funders are going to have the following basic requirements:

Net worth equal to or greater than the loan amount.
Debt-Service Coverage Ratio (DSCR) of at least 1.20 (This means Net Operating Income/Monthly Payment is at least 1.20).
9-12 months' payment cash reserves (whether interest-only or principal and interest).
Credit score of 620 or better (700+ for start-ups) in most cases.
90%-95% occupancy for tenanted properties for at least three months.

If you do not satisfy the above requirements, we can still help you. A bridge loan may give you time to bolster your qualifications over the next 2-3 years, until you can qualify for permanent financing. This is often used when you are purchasing a property that needs major rehabilitation or perhaps is under-occupied.

Bridge loans can be interest-only or have capitalized interest to assist with qualifying. Bridge loans are more flexible on credit, but may require increased cash reserves. For construction loans, you need to have at least 10% of the construction cost in liquid funds on-top of a reserve requirement of 6-9 months' payments and down payment funds if you are purchasing the land concurrent with the new loan.

Step Two - Processing

Once we've decided on the proper loan type for your transaction, our processors will work with you to gather any additional required documents. You may get a list of the documents normally required by clicking on your loan type, below. The list we provide is not exhaustive, and a lender may request additional documents to what we show on the checklist. As each borrower is different, and every loan is individually-underwritten, you may be asked to provide certain additional information that pertains to your unique situation.

We underwrite every loan in-house, prior to forwarding it to a lender. This enables the lender to know that they are receiving a full package that is easy to understand, and we take the time to explain as many aspects of the transaction as possible. In short, we tell your story, so that the lender understands your situation as fully as possible. Since we are so diligent, we are often able to get priority processing from the lender, which shortens the processing time from application to formal approval.

Step Three - Underwriting

Every funder has its own internal guidelines, even if the loan comes with a government or agency guarantee. Due to our close working relationships with our funders, we can direct your application to the funder most likely to approve it. During the underwriting process, the funder will determine the rate and terms it can offer to you. We often push-back at the first offer to attempt to get you the best deal possible. Once we believe we have the funder's best offer, we will ask for a term sheet to be issued. This term sheet constitutes a conditional loan approval, subject usually to an acceptable appraisal and final confirmation of the borrower's capacity for the loan.

Step Four - Approval

The funder will issue a term sheet if it finds the application acceptable. The term sheet will detail the terms and conditions of the loan and the interest rate. It will state whether the interest rate is fixed or variable. If the rate is variable, it will identify the index used and the margin, as well as the frequency of any payment adjustments. It will also state any outstanding conditions to be met, such as a valid Appraisal Report, Phase I and/or Phase II Environment Reports, and any other conditions specific to the transaction. If the terms are acceptable, you will sign and return the term sheet.

The term sheet will usually ask for you to make a deposit toward the costs of inspections and reports. This is usually a minimum of $10,000 up to 1.00% of the loan amount, depending on the funder; sometimes less for certain SBA loans.

You will remit this amount to the funder, as well as our underwriting fee, which will range from $2,500 to 10 bps (0.10%) of the loan amount. Once we receive the signed term sheet and your payment, we will forward it to the funder. From this point, the appraisal will usually be completed within two to three weeks. If a Phase I or Phase II report is required, that may take 30-45 days to complete.

After all inspection reports have been returned to the funder and accepted by them, your deal will be scheduled to close.

Step Five - Closing and Settlement

Once cleared to close, you will be contacted by the title or escrow company to sign your final loan documents. These are usually returned to the funder via overnight pouch. Once reviewed and accepted, a wire transfer will be sent to the title/escrow company from which they will complete your transaction. They will proceed to your county clerk's office to register the title updates, and once the title is recorded, you will receive your keys and paperwork (for a purchase) or a check and paperwork (for a refi).