Commercial Loans Blog

How To Underwrite Commercial Loans - Part 1

Posted by George Blackburne on Fri, Sep 28, 2018

If you want to get into the commercial loan brokerage business, you first need to learn how to underwrite commercial loans.  It is a surprisingly straight-forward process.  You'll need to learn about a dozen ratios and about 200 terms of art specific to commercial real estate finance; but you can master most of these in a single, very long day.


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One of the tools that I use when I teach brokers the commercial loan business is my Commercial Mortgage Underwriting Manual.  We are in the process right now of adding our entire commercial loan training manual to the free Knowledge Base section our flagship website,


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Today I am going to give you links to the first ten pages of our commercial loan underwriting manual, so you can begin your study today.


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  1. The Table of Contents lists which lessons have so far been published.

  2. We start with a short introduction.

  3. Much of the underwriting of commercial loans can be boiled down to the results of three main ratios.

  4. First we discuss the Loan-to-Value Ratio, as it pertains to commercial loans.

  5. Next we talk about the Debt Ratios of the particular borrowers.

  6. We finish with a discussion of the Debt Service Coverage Ratio, perhaps the single most important ratio in all of commercial real estate finance.

  7. What is a Loan Constant?  Without knowing the loan constant, the Debt Service Coverage Ratio calculation is meaningless.

  8. The big question for the borrower is, "How large of a commercial loan can I get?"

  9. The purpose of the Operating Expense Ratio is to catch cheaters trying to get a commercial loan larger than they deserve.

  10. You need to understand the different types of commercial leases.


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Topics: commercial loan officer training