There is no single down payment figure for a commercial property. Depending on the loan program, the property type, and the borrower, expect anywhere from about 10% to more than 35% down. Investment property that you do not occupy typically needs 25% to 35%, while owner-occupied buyers using an SBA program may put down as little as 10 percent. This guide breaks the number down by program and property type, covers the total cash you need beyond the down payment, and explains where a private lender fits.
Key takeaways
- There is no single figure. Commercial down payments run from about 10% to more than 35%.
- Investment and non-owner-occupied property typically needs 25% to 35% down.
- Owner-occupants may access SBA programs at 10 to 15 percent down; SBA is not available for investors.
- Property type drives the number: multifamily and industrial sit lower, office, retail, and hotels higher.
- Budget roughly 130% to 140% of the down payment for total cash, once closing costs and reserves are added.
How much down payment does a commercial property require?
A commercial property generally requires a down payment between 10% and 35% of the purchase price, and there is no single fixed number. The amount depends on three things: the loan program, the property type, and your financial profile. Conventional loans usually sit at 20% to 30%, SBA programs for owner-occupants can go as low as 10 percent, and investment property that you do not occupy typically lands at 25% to 35%. The sections below break each of these down.
Down payment by loan program
The loan program you use is the biggest single factor in your down payment. Each program carries its own equity requirement.
Conventional commercial loans
Conventional commercial loans typically require 20% to 30% down, which is a loan-to-value ratio of 70% to 80%. Banks and private lenders offer them without government backing, and stronger borrowers with high credit and reserves may reach the lower end of the range.
SBA 504 and 7(a) loans
SBA loans offer the lowest down payments in commercial real estate, but only for owner-occupants. The SBA 504 program requires as little as 10% down, rising to 15% for startups or special-purpose property such as hotels or gas stations. The SBA 7(a) program typically requires 10% to 20%. Both require the business to occupy at least 51 percent of the building, so SBA is not available for investment or non-owner-occupied property.
Bridge and private loans
Bridge and private loans typically require 20% to 35% down. These are the practical route for investment property, transitional or non-conventional deals, and borrowers who need to move faster than a bank allows. A private lender approves on the property and the plan rather than on an owner-occupancy requirement, which makes it a fit where SBA and many bank programs do not apply.
Down payment by property type
Property type shifts the down payment because lenders price risk by asset class. Stronger, more liquid property types allow lower down payments; higher-risk ones require a larger equity cushion.
| Property type | Typical down payment |
| Multifamily (5+ units) | 20% to 25% |
| Industrial and warehouse | 20% to 25% |
| Anchored retail | 25% to 30% |
| Office | 25% to 35% |
| Hotels, self-storage, special-use | 30% to 50% |
| Raw or undeveloped land | up to 50% or more |
Multifamily and industrial draw the strongest lender appetite, so they finance at the lowest down payments. Office, retail, and hospitality carry more risk and require more equity, and undeveloped land sits at the top of the range.
Owner-occupied vs investment property
Whether you occupy the property is one of the largest factors in your down payment. Owner-occupied property, where your business uses at least 51% of the building, qualifies for SBA programs and lower down payments, because lenders see an owner-operator as lower risk. Investment property, where you collect rent but do not occupy the space, typically requires 25% to 35% down, and SBA programs are not an option. Strong rent rolls, long leases, and creditworthy tenants can improve the terms on an investment deal, but the baseline equity requirement is higher.
What else affects your down payment?
Beyond program and property type, lenders adjust the down payment based on the borrower and the deal:
- Credit: stronger personal and business credit supports a lower down payment.
- Debt service coverage ratio (DSCR): a property that comfortably covers its debt payments carries less risk.
- Loan-to-value tiers: lenders price in tiers, and dropping below a threshold like 75% LTV can improve terms.
- Reserves: cash reserves after closing reassure the lender.
- Property risk: condition, location, and tenancy all move the requirement.
Total cash needed beyond the down payment
Your down payment is not the only cash you need at closing. Budget for closing costs of roughly 1.5% to 3% of the loan amount, plus post-closing reserves that lenders often set at 6 to 12 months of debt service. A useful rule is to plan for about 130% to 140% of your down payment in total cash, which covers the down payment itself, closing costs, and reserves. Underbudgeting here is a common reason deals stall late.
How to lower your down payment or fund it
You can reduce or cover a commercial down payment in several ways. The moves split into lowering the requirement and funding the cash you still need.
To lower the requirement:
- Strengthen the property’s DSCR so it covers its debt more comfortably
- Improve your personal and business credit before you apply
- Choose a property type lenders view favorably, such as multifamily or industrial
- Bring a stronger borrower profile, including reserves and net worth
To fund the down payment:
- Business working capital
- Investor or partner capital
- Equity in other property you own
- A bridge loan for a transitional or development deal where permanent financing is not yet in place
Each source has tradeoffs, so match the funding to the timeline of the deal.
Commercial down payments at Fidelity
Fidelity Mortgage Lenders arranges business-purpose loans secured by commercial and investment real estate, and works with investors and non-owner-occupant borrowers. Down payment and structure are set per deal based on the property, the borrower, and the plan, with approval driven by the asset rather than an owner-occupancy rule. If a bank has declined your deal or you need to move faster than a conventional timeline allows, a private lender is often the practical route. To talk through a specific property, contact a Fidelity representative at (800) 752-9533 or info@fidelitylenders.com.
Frequently asked questions
What is the minimum down payment on a commercial property?
The minimum is about 10 percent, available to owner-occupants through SBA 504 or 7(a) programs. Conventional loans typically require 20 to 30 percent, and investment property usually requires 25% to 35%.
Can you buy a commercial property with no money down?
It is rare. True no-money-down commercial deals usually depend on cross-collateralizing equity in another property, seller financing, or a partner who funds the equity. Most lenders require at least 10 percent from an owner-occupant or 25% to 35% from an investor.
How much down payment does an investment property need versus owner-occupied?
An investment property you do not occupy typically needs 25% to 35% percent down, and it is not eligible for SBA financing. An owner-occupied property, where your business uses at least 51% of the space, can qualify for SBA programs with as little as 10% down.
Why do commercial loans need a bigger down payment than home loans?
Commercial property is harder to value, less liquid, and repaid largely from the property’s income, so lenders hold a larger equity cushion to offset the added risk. That is why commercial down payments start where many residential loans end.
Disclaimer: This article is provided for general educational purposes only and is current as of the date shown above. It is not legal, tax, financial, or investment advice, and it does not create a professional relationship. Down payment, loan-to-value, and qualification requirements vary by lender, loan program, property type, and individual circumstances. SBA programs and their terms are set by the U.S. Small Business Administration and participating lenders. Any figures cited are drawn from published industry data and are illustrative, not quotes or guarantees. Consult a licensed professional before making a financing decision.
Disclosure: Fidelity Mortgage Lenders is a licensed real estate broker that arranges private money loans secured by commercial or residential real estate for business purposes in California, Colorado, Idaho, Montana, Oregon, Texas, Utah, and Washington. Ask us about loans in Nevada. Fidelity makes non-consumer, business-purpose loans only and does not originate SBA loans; these loans are not for personal, family, or household use. California Department of Real Estate, Real Estate Broker No. 00388229. Corporate NMLS ID No. 1726526. Readers should evaluate their own circumstances and obtain a customized quote before borrowing.
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