What Is a Commercial Mortgage and How to Get One?

If you're a business owner or investor looking to purchase commercial property, you've likely come across the term commercial mortgage. It might sound a little intimidating at first, but once you understand the basics, it’s a powerful tool that can help you grow your business or real estate portfolio. In this post, we’ll break down what a commercial mortgage is, how it works, and what steps you need to take to get one.

What Is a Commercial Mortgage?

A commercial mortgage is a loan used to purchase, refinance, or develop commercial property — that is, property used for business purposes. This could include:

Office buildings
Retail spaces
Warehouses
Apartment complexes (typically 5 units or more)
Industrial properties
Mixed-use buildings

Just like a residential mortgage helps you buy a house, a commercial mortgage helps you acquire property for your business or investment purposes.

But there are some key differences.

How Is It Different from a Residential Mortgage?

Here are a few main distinctions:

Lenders assess the property’s income potential, not just your personal credit.
Loan terms are usually shorter, often 5 to 20 years, though amortization may be longer.
Interest rates are typically higher, as commercial loans are considered riskier.
Down payments are larger — expect to put down 20% to 30% or more.
The loan may be taken out in the name of a business entity rather than an individual.

Types of Commercial Mortgages

Depending on your needs, there are several kinds of commercial mortgages:

Owner-Occupied Mortgage – If you’re buying a building for your own business.
Investment Mortgage – For income-generating properties (e.g., apartment buildings, retail space).
Construction Loans – To finance new developments or major renovations.
Bridge Loans – Short-term financing while you wait for long-term financing or sell another property.

How to Get a Commercial Mortgage: Step-by-Step

If you're thinking about applying, here’s how the process typically works:

1. Check Your Credit and Business Financials

Lenders will look at both your personal credit and your business financials — including revenue, cash flow, and your business credit score. You’ll want your financial house in order before applying.

2. Have a Business Plan and Property Details

Be prepared to explain how the property will generate income (if it’s an investment) or support your business operations. Lenders will want to see:

A solid business plan
Details about the property (location, size, income potential, etc.)
Lease agreements (if applicable)

3. Decide What Type of Loan You Need

Figure out if you need a standard mortgage, construction financing, or something more specialized. This will guide which lenders you approach.

4. Shop Around for Lenders

You can get a commercial mortgage from:

Banks
Credit unions
Private lenders
SBA-backed lenders (for small businesses)

Compare rates, terms, fees, and approval times.

5. Submit Your Application

You'll typically need to provide:

Personal and business tax returns
Bank statements
Business licenses
Property details
Financial statements (like profit & loss reports)

6. Get the Property Appraised and Inspected

Lenders require an independent appraisal to assess the property’s market value. Some may also want a physical inspection, environmental assessments, or zoning verification.

7. Close the Loan

Once everything checks out, you’ll review and sign the loan documents, provide your down payment, and officially close the deal.

Tips for Success

Work with a commercial mortgage broker if you’re not sure where to start — they can help match you with the right lenders.
Have a clear exit strategy if it’s a short-term loan (like a bridge loan).
Stay organized — gather your documents ahead of time to speed up the process.

Final Thoughts

A commercial mortgage can be a game-changer for your business or investment journey. While the process may seem complex, the right preparation and guidance can make it much smoother. Whether you’re buying your first office space or expanding your real estate portfolio, understanding how commercial mortgages work is a smart first step.

If you are looking for commercial mortgage or need more information then feel free to reach out Sarabjit

Back to Main Blog Page

Mortgage Blog

What is Commercial Mortgage and how to get it?

What Is a Commercial Mortgage and How to Get One?