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Updated almost 4 years ago on . Most recent reply
![April Eilers's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1248053/1621510649-avatar-aprile7.jpg?twic=v1/output=image/crop=516x516@42x123/cover=128x128&v=2)
How to Secure Loan for 5-Plex
Based on my research, and what I've heard from numerous lenders, a 5 unit home is classified as a commercial property, and can only qualify for commercial loans. Is this understanding correct?
So far, the only bank/lender we have found that offers loans for this type of property has unfavorable terms. They do not offer long term fixed rates on commercial property.
Do you have any advice on who does offer more favorable terms for 5 unit residential (i.e., commercial)? I am looking for a 30 year fixed rate loan with a reasonable APR. Ideally a 20-25% down payment.
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![Michael Albaum's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1045196/1634583996-avatar-michaela447.jpg?twic=v1/output=image/crop=511x511@0x0/cover=128x128&v=2)
Hey April, you nailed it; 5+ units = commercial property and thus commercial lending. Every single lender I've worked with for commercial lending, they only offer fixed terms for 5 or 10 years with 20 or 25 year amortization periods. Making the leap into the commercial lending space is often a rude awakening from the residential space since there is seldom long term fixed financing available. Obviously, if you come across a commercial lender that will give you the same type of mortgage product as a residential lender, then let me know who it is as I'd love to use them as well!
In the commercial world, lenders know that it's purely business in that the units will be rented out and usually on 1 year leases. As such, they assume there is more volatility and your cash flow will not be as stable as compared to an owner occupant living in a SFR. Best of luck!