How large of a down payment is required for a commercial real estate purchase?

The amount of down payment required for a commercial real estate purchase in Washington varies depending on the type of transaction and the lender’s requirements. Generally, a lender will require a minimum down payment of 20 percent of the purchase price when you’re buying a commercial property. This amount can be as high as 25 percent or 30 percent. There are also instances where a lender might require a larger down payment, such as when the property being purchased is considered “riskier” or has a lower market value. When it comes to financing a commercial real estate purchase, loan-to-value ratio (LTV) is an important factor. LTV is the ratio between the amount of debt to the value of the property. Generally, lenders will require borrowers to obtain at least a 50 percent LTV in order to receive certain loan products. Thus, if the property you’re purchasing has a value of $1 million, the lender will likely require that you make a minimum down payment of $500,000. You should also keep in mind that a lender might also require you to pay closing costs and other fees in addition to a down payment. Be sure to ask your lender what the upfront costs will be prior to committing to a transaction.

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How large of a down payment is required for a commercial real estate purchase?

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