When it comes to real estate, sales are broken up into the two following categories:
il Residential property: From a lender's point of view, residential property is your personal residence, which is more than likely a single-family home. A property that contains two to four family dwelling units — duplexes, triplexes, or fourplexes — is also treated as residential.
I Commercial property: A commercial property, from a lender's point of view, is a property that contains five or more family dwelling units. Under this category, you can have a 5-unit apartment building or a 100-unit apartment building (or anything in between!).
These are all considered commercial as well: office buildings, strip malls, warehouses, industrial buildings, mobile home parks, and raw land. A property that contains a mix of any number of residential units and commercial spaces is also considered commercial.
Obtaining a loan for a commercial property is similar to obtaining a loan for a residential property. For example, with both types of loans you have to apply for the loan and show that you have the capability of repaying the loan, you must be creditworthy, and you must provide a down payment of some sort. But, that's basically where the similarities end.
There are two main differences between commercial and residential lending. The first involves the property's merits and the second involves the down payment. We explain both in the following sections.
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If you are getting ready to purchase your first home or if you think you can't afford to purchase your first home, don't make another move until you have read this important information! Every year, Federal, State and Local government and community development programs help thousands of people obtain there first home.