Every deal
- Entity documents, if the property is held in an LLC.
- Government photo ID for each guarantor.
- Proof of funds for the down payment and reserves.
- The purchase contract, or the current note if you are refinancing.
Investor resources
The vocabulary the term sheet assumes you already know
Commercial financing has its own language, and nobody explains it before they quote you. Here is what the terms mean, what each type of deal requires, and the answers to what investors ask most.
Terms you will see on every term sheet
These are the words that decide how much you can borrow and what it costs. The abbreviations stay in English because that is how the market uses them.
- DSCR
- Debt Service Coverage Ratio. The property's net operating income divided by its annual debt payment. At 1.00 the rent exactly covers the mortgage; above 1.00 there is a cushion, and lenders want to see one.
- NOI
- Net Operating Income. What the property earns after operating expenses — taxes, insurance, management, maintenance — but before the mortgage payment. It is the numerator of the DSCR.
- LTV
- Loan to Value. The loan as a percentage of the property's value. At 80% LTV on a $500,000 property, the loan is $400,000 and the remaining $100,000 is your equity.
- LTC
- Loan to Cost. The loan as a percentage of what the project costs in total — land plus construction plus soft costs — rather than of what it will be worth. Construction deals are measured on both.
- ARV
- After Repair Value. What a property will be worth once the scope of work is finished, supported by comparable sales. On a renovation loan the leverage is quoted against this number, not the purchase price.
- LTARV
- Loan to After Repair Value. The same idea as LTV, measured against the finished value instead of today's. It is the ceiling that decides how much a fix and flip can borrow.
- Draw
- A release of construction money after a stage is completed and inspected. You fund the work first and get reimbursed, which is why renovation and construction loans still require working capital.
- Interest-only
- A payment that covers interest and nothing else, leaving the balance untouched. Standard on short-term loans, because a property under renovation or construction produces no income to amortize against.
- Points
- A fee charged at closing, quoted as a percentage of the loan. Two points on a $500,000 loan is $10,000. Points are separate from the rate, so comparing rates alone does not tell you which loan is cheaper.
- Term sheet
- A written summary of the structure a lender is willing to offer: amount, rate, points, term and conditions. It is not a commitment to lend, and it is the document worth comparing side by side.
- First lien
- The senior claim on a property. If the loan is not repaid, the first lien holder is paid before anyone else, which is why most lenders require that position.
- Prepayment penalty
- A fee for paying the loan off early. It matters most when the plan is to sell or refinance quickly, because it can erase the advantage of a lower rate.
- Reserves
- Money you must still have available after closing, usually measured in months of payments. Lenders check them because a project that runs long has to be carried by somebody.
- Sponsor
- The person or entity behind the deal — you. Sponsor experience, meaning how many similar projects you have completed, moves both the leverage and the pricing you are offered.
- Stabilized
- A property that is leased and producing its expected income. Until it is, it gets measured on what it earns today rather than on what the projection says it will earn.
What to have ready, by type of deal
Nothing here is unusual, but gathering it takes longer than people expect. What sets the pace of a closing is almost never the lender — it is how fast this comes together.
Rental property (DSCR)
- The signed lease, or a market rent appraisal if it is not yet leased.
- Operating expenses, including taxes and insurance.
- A rent roll, if the property has more than one unit.
Renovation and construction
- A line-item scope of work or budget, with a schedule.
- Your contractor's license and completed-project history.
- Permitted plans, for ground-up construction.
- A builder's risk insurance policy.
- Comparable sales supporting the after-repair value.
Land
- A current survey and clean title.
- Zoning and entitlement status, with anything pending identified.
- Utility availability, or a plan and budget to bring services in.
- A written exit — what repays the loan, and when.
What investors ask before they apply
Questions about a specific product are answered on that program's page. These are the ones that cut across all of them.
Will applying affect my credit score?
The first conversation does not: we talk about the property and the numbers with no documents and no credit pull. A credit check comes later, once you have decided to move forward on a specific structure.
What credit score do I need?
It varies by program and it is rarely the thing that decides the deal. On asset-based lending the collateral and the exit carry more weight than the score, though the score still moves the pricing. Tell us where you stand and we will tell you honestly what it changes.
Can I borrow through an LLC instead of personally?
Yes, and on investment property it is the norm. It keeps the asset separate from your personal credit. Expect to sign a personal guarantee on most structures even when the borrower is the entity.
How much cash do I actually need to bring?
More than the down payment alone. Budget for closing costs, points, the reserves the lender wants to see after closing, and — on renovation or construction — enough working capital to fund each stage before the draw reimburses you.
Why compare term sheets instead of just rates?
Because the rate is one line of several that decide the cost. Points, the prepayment penalty, the term, the draw schedule and the exit fee all move the real number, and a lower rate with two extra points is frequently the more expensive loan.
What does it cost me to work with a broker?
Compensation is disclosed in writing before you commit to anything, and it appears on the closing statement. Ask us for the number early — any broker who is vague about how they are paid is telling you something.
Do you finance owner-occupied homes?
No. These are business-purpose loans for investment and commercial property. A primary residence is a different product with a different set of consumer protections and a different kind of lender.
Contact our team
Still not sure which program fits?
Describe the deal and we will tell you which structures are realistic — and if none of them are, we will say that too.
No obligation. Financing availability and eligibility are subject to applicable requirements and individual circumstances.