Obtaining commercial mortgage as a Rookie

[Frank Teshima]

Hey BP! I am curious about obtaining a commercial mortgage as a rookie to buy my first property. My partner and I were currently in the process of obtaining a residential mortgage to buy a duplex, but my lender threw a curve ball at us, and told us that he wouldnt be able to count the rental income towards our overall income, which resulted in our DTI being too high. So, i could look for other lenders, but im curious to see if going the commercial route would be fine. The reason while i wouldnt mind going the commercial is because of the fact that they dont really "care" about your personal financials as much as residentials mortgages. And i would be able to change careers. But i am curious if it is a good idea to do as a rookie.

Has anyone else done their first deal with a commercial mortgage? how was it? and what were some obstacles? Thank you in advance for the help and tips!!

[Jody Sperling]

Go for it. The differences in a commercial mortgage and a residential mortgage are minimal. You'll have to have a larger downpayment: 25%, usually a higher interest rate, and often but not always a shorter lending period: 20yrs is frequent. 

All but two of my mortgages are commercial, and I don't even speak with the residential lending arm at my bank anymore. Not worth the hassle and extra paperwork. Plus, to make a career of real estate, especially as a rookie, you have to move way faster than the residential side allows. Best of luck!