Commercial finance, where the building has to carry itself.

Commercial real estate finance covers property held to produce income - office, retail, industrial, and multifamily above the four units where residential lending stops. The underwriting logic is different from a home loan in a way worth internalising before you start: the building is expected to service its own debt. Lenders work from net operating income, the rent left after operating expenses, and measure it against the proposed payment as a coverage ratio. Your personal financial position matters, but chiefly as a backstop rather than as the basis of the decision.

Balloons, Recourse and the Terms That Matter

Several structural features have no residential equivalent. Commercial loans commonly amortise over twenty or twenty-five years while maturing in five, seven or ten, leaving a balloon payment that has to be refinanced or paid - so the real question isn't only whether you can afford the payment but whether the property will still finance in the year the balloon lands. Recourse is negotiable: a non-recourse loan limits the lender to the property itself, while a recourse loan reaches your other assets, and that distinction is worth more than a modest difference in rate. Prepayment terms range from a straightforward penalty to defeasance arrangements that are expensive and complicated to unwind. These deals are negotiated rather than quoted, and the terms surrounding the rate are usually where the money actually sits.

If you would like to explore whether commercial financing matches your purchase price, credit profile and long-term budget, reach out to 3E Lending to speak with our licensed Texas mortgage team in Katy.