How much can you borrow?
Before you make an offer, know your ceiling. This runs a lender’s two tests — debt-service coverage and loan-to-value — to show the largest loan a deal supports and the down payment you’ll need.
Want real financing numbers?
Lenders size to the lower of LTV, DSCR and debt yield, and the binding one changes by asset type. I'll introduce you to lenders who actually quote this product. I'm a broker, not a lender.
Planning estimate — not a loan commitment, quote, or financial advice. Verify with a licensed lender.
Frequently asked
How do lenders decide how much I can borrow on commercial property?
Two limits, whichever is lower. The first is debt-service coverage (DSCR): the property’s net operating income must exceed the loan payment by a cushion — usually 1.20x–1.30x. The second is loan-to-value (LTV): most commercial lenders cap the loan at 65%–80% of value. Your maximum loan is the lower of those two.
What down payment do I need for commercial real estate?
Typically 20%–35% for investment property, driven by the LTV cap. Owner-occupied purchases through SBA programs can go much lower — sometimes 10%. The right structure depends on the deal; that’s where a lender relationship matters.
Does a higher NOI let me borrow more?
Yes, up to the LTV ceiling. More net operating income supports a larger payment at the required coverage ratio, so the DSCR-based loan rises — until the loan-to-value cap becomes the binding limit.
Three tests, and the smallest one wins
Lenders do not size a loan to what you can afford. They run loan-to-value, debt service coverage and debt yield, and advance the lowest of the three.
Which one binds moves with the market. When rates are low, coverage is comfortable and loan-to-value governs. As rates rise, coverage tightens and debt yield — which ignores the interest rate entirely — frequently becomes the governing test. Buyers who budgeted equity against an LTV assumption discover the shortfall at underwriting rather than at offer.
The gap between your numbers and theirs
Every test runs on the lender's normalised NOI, not yours. Expect a vacancy factor applied to a fully leased building, a market management fee inserted even if you self-manage, and a replacement reserve deducted. The difference between an owner's operating statement and a lender's underwriting is routinely 10–20%, and it is entirely predictable in advance.
Run your own numbers with those three adjustments before relying on any proceeds figure. If the result changes which test binds, that is worth knowing before you write an offer — because if coverage or debt yield is binding, negotiating a better rate will not move your loan size at all.
Common questions
How much can I borrow on a commercial property?
The lowest amount produced by three tests: loan-to-value, debt service coverage and debt yield, each applied to the lender's normalised income rather than your operating statement. Which test binds changes with interest rates and asset type.
Why is the lender's number lower than mine?
Because they rebuild the income: a vacancy factor on a full building, a market management fee even where you self-manage, and a replacement reserve. That adjustment is commonly 10 to 20 percent of NOI.
Will a better interest rate increase my loan size?
Only if debt service coverage is the binding test. If debt yield or loan-to-value is binding, the rate does not enter the calculation and improving it changes nothing.
Tools: deal analyzer · DSCR · IRR · all calculators · Justin Crow, South Florida commercial broker