What Constitutes a Commercial Property?
When you are ready to apply for a commercial property loan, please return to our home page to start entering your contact information. If you are not sure if your property needs a home loan or a commercial property loan, please continue reading below.
Commercial property loans are real estate loans secured by anything other than a one-to-four family dwelling or a lot that is going to be the site of your personal residence. Okay, I've used a confusing term here: one-to-four family dwelling. What this term means is a residential property with either a single family home or a condo, a duplex, a triplex, or a four-plex. A loan on a five-plex would not be considered a home loan. It would be considered a form of commercial property loan.
So what's the big deal about a one-to-four family dwelling? In order to promote home ownership, the Federal government essentially subsidizes the interest rate on home loans. In other words, borrowers get a cheaper interest rate on a loan to purchase or refinance their personal residence because the government is helping them out. This is one of the reasons why the typical home loan is cheaper than the typical commercial property loan.
Commercial property loans include loans on multifamily projects (apartments with 5+ residential units), office buildings, retail properties, industrial properties, hospitality properties (just a fancy word for hotels and motels), business properties, and land. Most land loans are considered commercial property loans, unless the land is just large enough for one single family dwelling and the borrower purchased the land as the site for his future personal residence.
What if the property consists of a single apartment unit over a storefront? Is this a commercial property loan or a home loan? After all, there is only one dwelling unit. This kind of property is known as a mixed use property. A mixed use property is one that has at least one dwelling unit and at least one unit that is commercial (business) in nature, like a storefront, a warehouse, or some self-storage units. Mixed use properties are considered to be a form of commercial property, and you would have to go to a commercial property lender to get a loan on a mixed use property.
If your property is considered a commercial property and you need a commercial property loan, please return to our home page to start entering your contact information.