Commercial mortgage myths  
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I won’t be able to get a loan if my bank declined me: False
Fact: Some lenders use broader guidelines than banks, and can approve loans that banks turn down or aren’t comfortable with.
Today there are a lot of options for borrowers who cannot obtain conventional financing.

 I won’t be able to get a loan if I’m self-employed: False
Fact: If you can provide documents to support your income and assets, you can qualify for a conventional loan program. If you cannot or choose not to supply tax returns or other documentation, you may qualify for a No Income Verification/Limited Documentation Loan Program (some lenders call these types of loans Stated Income/Stated Asset Loans). This program, offered by some lenders, makes getting a loan easier and faster, especially if you own a predominately cash-based business

All commerical mortgages require personal guarantees: False
Fact: Non-recourse loans are still around

Rate is the most critical aspect of a loan: False
Fact: Depending on your circumstances, other factors are often more important: how quickly the loan can close, the monthly payment, length of term, amortization schedule, reporting requirements, covenants, or assumability of the loan.

I must live in the same state where the property is located: False
Fact: Many lenders, especially banks, won’t lend money if you and the property are in different states or if you or the properties are outside of the bank’s regional footprint. However, a few national lenders will lend to out-of-state borrowers.

Appraisal costs are the same for commercial and residential properties: False
Fact:Determining valuation for commercial properties is more intricate, and therefore more costly than for residential properties. A lot more research is involved to find similar commercial properties in a given market.
Recent sales are compared, as well as the rental income potential. Proper valuation is critical as property income and appreciation potential are the biggest determinants of value for any real estate investor.

Interest rates are the same for commercial and residential loans: False
Fact: Commercial loan interest rates tend to be higher for a number of reasons.

First, commercial loans have greater inherent risk.
Second, government sponsored agencies such as Fannie Mae and Freddie Mac, which help to keep residential rates low by buying loans, don’t exist for the majority of commercial real estate.
Lastly, there are fewer lending options for commercial borrowers, which results in a less competitive marketplace.

A down payment isn’t needed for a commercial mortgage: False
Fact: Commercial lenders don’t typically lend the full value of a property.  Usually, the maximum loan-to-value ratio (LTV) is 80%, meaning that they will only lend 80% of the property’s value. So for a $300,000 property, you could borrow $240,000 with a $60,000 down payment. Some lenders with more flexible programs will offer higher LTVs (i.e. up to 97%) to their most creditworthy borrowers.  

Appraised value is always used to calculate loan-to-value (LTV):False
Fact: For a purchase loan, both the purchase price and the appraised value are examined. The lower of the two is typically used to determine the loan amount. For a refinance or cash-out refinance, appraised value is used.