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Small-Balance Commercial Mortgages for Apartment Buildings

Commercial Mortgage
Posted on 
June 25, 2015

With rental occupancy climbing, now is a great time for residential mortgage brokers to consider working with clients who need small-balance commercial mortgages for smaller apartment and multifamily properties. According to real estate analysts Axiometrics, the national rental occupancy rate was up to 95.7 percent in May.

“The May rate historically is the start of each year’s occupancy peak, meaning occupancy should remain at the current level or higher,” Axiometrics VP of research told CNBC.

Rents were also up by 5 percent this month and up 3.6 percent year over year, signaling steady growth. With occupancy and rents up, more current property owners may be looking to refinance, while more first-time buyers could seek financing. Here’s what you need to know about your borrower and their property before submitting a loan scenario to a commercial mortgage lender:


Get as much information about your borrower’s property as possible. Your lender will need to know the location, the size and the condition of the property. Photos of the apartment or multifamily building are always helpful.


Your borrower’s credit will always be a factor, so it’s a great idea to discuss their credit history with them. Provide your lender with a recent report and be prepared to answer any questions.

Use of funds:

Small-balance commercial lenders will want to know how your borrower plans to use the money. Whether it’s purchasing an apartment or multifamily building, or refinancing to pay off a mortgage or make improvements or pay off debt, be sure to provide your lender with a loan summary detailing these plans

Capacity to pay:

Your borrower needs to be able to show they can make their monthly payments. Be sure to collect all relevant financial data from your borrower and submit this to your lender.

If you’re passing up on small-balance commercial mortgages for apartments and multifamily buildings, it amounts to passing up on additional income. These investment properties are a great addition to your products and may help you to transition into offering more commercial mortgage services. Follow the above tips, and you’ll see how working with commercial mortgage borrowers looking for apartment and multifamily financing can benefit your business.


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