Lender Categories

Other than banks, there are certain categories of lenders (with different expectations) that offer commercial mortgages and other loans to borrowers.

Private/Individuals: Some firms offers loans that are funded by private individuals (or a groups of private individuals), instead of from a company’s assets. Private lenders are often willing to receive loans with higher levels of risk in return for a higher return rate on the investment.

Hard money: These lenders offer specialize in short-term loans (1-3 years) used to purchase or renovate owner-occupied commercial properties before refinancing to a long-term mortgage. Hard money commercial lenders are sometimes less stringent about credit expectations, and may offer up to 65% LTV.

Direct Lenders: These entities work directly with borrowers, as opposed to utilizing brokers or other intermediaries as they finalize loans. These lenders can be among the fastest to close mortgages and bridge loans, since there are fewer entities (and fees) involved in their transactions.


CMBS: Commercial Mortgage Backed Securities (CMBS) are a type of security investment secured by commercial mortgages. Conduits, also known as CMBS lenders, make large commercial first mortgages exclusively on very standard commercial properties above $5M. (CMBS may also be generated by commercial or investment banks, syndicates of banks, or trusts.) These lenders originate commercial mortgages with the idea of securitizing them, arranging them into asset pools, and then selling standardized sections of these pools to investors on the open market.

Insurance Companies: Life insurance companies – sometimes called just “life companies” – are stringent lenders that offer large balance mortgages. They often work only with new properties and limit their commercial loans to just 50% to 55% LTV. Few will allow second mortgages behind their loans, and borrowers often have to put down a minimum of 45% of the purchase price.

Agencies: Whereas a conventional loan is a mortgage that is not guaranteed or insured by any government agency, an agency loan is backed by an entity of the federal government. Government agencies such as HUD, Fannie Mae and Freddie Mac (and government corporations such as Ginnie Mae) are active lenders for large balance commercial mortgages in the United States.


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