The fundamentals of lending: Can the lender get their money back and the higher the risk the higher the return the lender will want.
Three basic factors:
1.Income, 2. Credit, and 3.Equity. (short for ICE) (the higher of the three factors the more likely and the better the finance)
On incoming producing properties that can self sustain the mortgage payments and obligation. The lender typically wants to see that the NOI (net income) is 1.2 times of the mortgage payment.
For example: if the mortgage payment is $100 then the NOI has to be $120.
Guideline: Typically, 75-80% Loan to Value (LTV) but exceptions can be made if the borrower has strong ICE. For example, a client with a substantial net worth can borrow more because the bank can go after other personal assets or if the building has a DSCR (debt service coverage ratio) over 2x with AAA tenants.
For example: a strip mall with an anchor tenant like Home Depot.
On apartment buildings, there are lenders that will offer 90% financing or allow a combined financing of 100% such as a seller holding a second mortgage.
Rate can be as low as 6.25% fixed for 10 years on an AAA client and property.