How to Use Borrower and Property Characteristics to Help Qualify Commercial Mortgages

With so many lending options in today’s commercial mortgage market, it can be difficult to know where to submit every type of small-balance deal.

The fact is, different lender types are always going to be best for certain scenarios.  The best thing a lender can do for originators and their clients is to clearly communicate the types of deals that meet their requirements or “fit their box.”

A good way to start the qualification process is to look at two important aspects of a deal: the property in question and the prospective borrower.  Here is a quick breakdown of the characteristics to identify as you search for the ideal lender option.

1. Property Type

Perhaps the easiest way to see if a deal could fit a particular lender’s box is to determine whether the real estate in question is listed as one of their eligible property types.  You can most likely find this information somewhere on the lender’s website, though it may also be beneficial to reach out to a sales representative so you can get a better explanation of what fits and what doesn’t.

With the recent addition of 1-4-unit residential buildings, Silver Hill Funding, LLC’s lineup now includes the following property types:

Multifamily Mobile Home Park
Mixed-Use Daycare Center
Office Automotive
Light Industrial Restaurant/Bar
Retail 1-4-unit attached/detached
Warehouse PUDs
Self-Storage Condominiums


This list is a comprehensive collection of the most common commercial and multifamily property types in the country.  However, the list also includes some property types, like bars and restaurants, that many other commercial lenders avoid.

That brings us to commonly ineligible property types like churches, adult lounges, and funeral parlors.  If your client is looking to finance one of these properties, their lender options may be limited to hard money options and other high interest rate alternatives.

To see specific examples of the types of properties Silver Hill lends on, head over to our Recent Closings page and scroll through a collection of closed loans.

2. Borrower Motivation

Once you have disqualified certain lenders based on property type eligibility, the next step is to take a close look at the borrower.  With a little analysis, you can get a good picture of who they are and what they are looking to accomplish by securing a loan.

To start, be sure to determine if the prospective borrower is bankable.  If they have a high credit score and zero blemishes in their financial history, they may be able to secure financing from a bank.  And when you consider the low rates and attractive terms banks offer, that is exactly what many in that position should do.

On the other hand, there are a number of instances where prospective borrowers do not want to work with a bank, even if they are bankable.  Consider the self-employed professional who prefers not to go through the hassle of providing tax returns or the investor who needs to close in a matter of weeks, not months.

These individuals are actually better served by working with a non-bank alternative lender, and you could save serious time by identifying that need before you start hunting for lending options.

As an example, Silver Hill works with a wide range of credit-worthy borrowers, from small-business owners who want to take cash out of their existing commercial mortgage to investors looking to diversify their portfolio by purchasing a duplex property.

Getting Started:

You likely already have a prospect qualification process in place – but it may not be suited specifically to the small-balance commercial/multifamily business.  The checklist below highlights the initial questions you can ask yourself as you look to find the ideal lender option for a new client:

The Basics

  • What is the borrower’s motivation for financing?
  • Is there an issue with the property or borrower that might limit the amount of lenders?
  • What is the real estate type and current use of the property?
  • How many units (multifamily) and/or what is the occupancy level and tenant mix?
  • What is the NOI (Net Operating Income)?
  • What is the square footage?
  • Does the property require rehab or repositioning?
  • Do you have photos of the property or have you inspected the property?
  • Was the property used previously for a purpose that may raise a concern for environmental issues?

The Project Objective

  • Is the property owner-occupied or an investment?
  • What is the expected holding time for the investment?
  • Will the ownership entity be individual or corporate?
  • If this is a refinance, what is the loan purpose?

Supporting Information and Documentation

  • How was the value of the property determined?
  • What is the balance on the current mortgage and when is it due?
  • Is the history of mortgage payments available?
  • Can the borrower provide the most current operating statements and rent roll?
  • What is the borrower’s credit score? Is a credit report available?

If a purchase:

  • Is the property listed by a real estate professional or is it a private sale?
  • Is there a purchase contract in place?
  • What is the closing date per the contract?
  • Is there a financing contingency?

If a refinance?

  • When was the property purchased? What was the purchase price?
  • What improvements have been made to the property?
  • What is the payoff amount including mortgages and other liens?
  • Is there subordinated debt that will remain in place?
  • Is the property currently listed for sale?

Want to see if your scenario fits Silver Hill’s box?

Contact your Silver Hill Regional Manager today to discuss a deal.  You can also visit our mortgage calculator to get instant pricing information.