Lenders and underwriters consider the loan to value ratio for commercial property loans. They calculate loan-to-value or LTV by multiplying the construction cost, sales price or the total loan balance (including all mortgages) of the property and dividing by the fair market value after completion and occupancy (based on a commercial appraisal). Multiply that figure by 100 to get the LTV ratio.

Lenders consider LTV debt to make mortgage decisions. Depending on the lender and type of project, expect a typical loan-to-value ratio around 60 to 85 percent. You may be able to go higher with a mezzanine loan, which is similar to a second mortgage except that the mortgage company accepts company stock as the security rather than the structure. If you default on the loan, the mortgage company takes the stock, takes over control of the company, and thus takes control of the property. Get a commercial loan by doing the following:

1. Find out what LTV ratio you will need for your project

2. Apply for a commercial property loan

3. Get supplemental funding via a mezzanine loan

Action Steps
The best contacts and resources to help you get it done

Get typical LTV ratios from a loan-to-value ratio provider

Find loan to value information on your commercial property type. While underwriting requirements vary from company to company, see what most underwriters expect based on your type of project.

I recommend: From apartments to warehouse, office space to multi-family living space, Commercial Mortgages Direct lets you use their loan to value ratio list. Parente Capital Wealth Advisors shows loan to value ratio requirements for special properties such as day cares, gas stations and convenience stores.

Use loan to value ratio information to apply for a commercial loan

Find a commercial loan for your business needs. Whether it's for new construction, to purchase an existing structure or to refinance for additional capital, get the loan that's right for your business.

I recommend: C-Loan boasts 750 commercial lenders competing for your business. Use this site for one stop shopping for your mortgage needs. Alternatively, apply directly with commercial lenders including Wachovia, Bank of America and GE Real Estate.

Combine your first mortgage with a mezzanine loan to increase your LTV mortgage ratio

Mezzanine loans provide additional capital for your commercial project. However, there's usually a cap LTV rate of 90 percent including both the first mortgage and the mezzanine loan. You can apply online for a mezzanine loan.

I recommend: W Financial, Blackstone Mortgage Corporation and Ocean Pacific Capital allow you to apply online for a mezzanine loan.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  In addition to loan to value ratio, underwriters also use debt service coverage ratio, credit worthiness and a property analysis to make mortgage decisions.
• •  Loan companies prefer loans with lower loan to value ratios because their risk is reduced. You need to have the capital available for the project with the expectation of a minimum of ten percent down.