Short answer: There is no single down-payment number for commercial property. Investor income-property loans often need roughly 20% to 35% or more down, depending on property type, leverage limits and the lender. SBA 504 loans generally require a borrower contribution of at least 10% of project cost, rising to 15% if the business is new or the building is limited- or special-purpose, and 20% if both apply. SBA 7(a), bridge and construction loans each have their own equity expectations. The right figure depends on the program, the property and underwriting — not a one-size quote.
Why commercial down payments vary
Commercial lenders size equity to the risk of the deal: who the tenants are, how stable the cash flow is, how specialized the building is, and how experienced the sponsor is. Federal bank examiners expect lenders to set their own credit policies for each type of loan they make, so two lenders can ask for different equity on the same building. Your down payment (or equity contribution) is only one piece; lenders also review debt service coverage (DSCR), loan-to-value, credit, liquidity and experience.
Typical ranges by loan type
- Investor commercial real estate (multifamily, office, retail, industrial and similar). Many permanent loans ask for equity in a rough band of about 20% to 35% or more of value or cost. Stabilized multifamily with strong leases often supports more leverage than a single-tenant retail building, a hotel or a property with a lot of near-term lease rollover. Exact requirements are set by each lender and program.
- SBA 504 (owner-occupied real estate and major fixed assets). Under SBA rules (13 CFR 120.910), the borrower generally contributes at least 10% of project cost. That rises to 15% if the business (or operating company) has operated for two years or less, or the project is a limited- or single-purpose building, and to 20% if both apply. The rest is typically split between a first lender (about half) and a Certified Development Company loan backed by the SBA (up to 40%). See how an SBA 504 loan works and the SBA 504 program page.
- SBA 7(a). Equity and down-payment expectations vary with the use of proceeds (real estate, business acquisition, equipment, working capital) and with the lender's policy under SOP 50 10 8.1. A 7(a) used to buy owner-occupied real estate can look different from a working-capital 7(a). Change-of-ownership deals follow separate SOP rules — check the current SOP text with your lender.
- Bridge loans. Short-term bridge financing is often used for acquisitions, renovations or lease-up. Equity needs are usually higher than on a stabilized permanent loan, because the property's income or condition is still changing.
- Construction loans. Construction and construction-to-permanent structures typically require meaningful cash equity into the project budget, plus contingencies. Soft costs, interest reserves and cost overruns all affect how much cash you need at the start.
What else moves the number
- Property type and lease quality. Strong, long leases on a familiar property type usually support more leverage than a specialized building or a thin rent roll.
- Sponsor strength. Experience with this property type, liquidity after closing and credit history can change how much equity a lender wants.
- Recourse and structure. Full recourse, limited recourse and non-recourse structures are underwritten differently.
- Appraisal and cost basis. Lenders often use the lower of appraised value or purchase price (or cost) when sizing the loan, so a high purchase price relative to value can mean more cash at closing.
A Washington example
Illustration only, not an actual client. An established medical practice in Bellevue wants to buy the small office building it already leases and occupy all of it. An SBA 504 structure might allow a 10% borrower contribution if the business is more than two years old and the building is a standard professional office, with a bank first loan and a CDC second loan making up the rest — subject to underwriting, appraisal and SBA eligibility. If the same buyer were instead an investor purchasing a multi-tenant retail strip to lease entirely to others, SBA would not fit, and a conventional income-property loan would likely ask for a larger equity check.
Nationwide where NEXA can fund
We finance commercial deals in Washington and nationwide in states where NEXA Lending can legally fund. Down-payment norms and program availability still depend on the property, the state and the lender. Send the scenario and I'll review it personally with one of NEXA Lending's in-house commercial lenders. Related: SBA 7(a) and 504, multifamily, office, retail and bridge loans.
Questions about this topic
How much down payment do you need for a commercial property?
It depends on the loan and the property. Investor commercial loans often need roughly 20% to 35% or more equity. SBA 504 generally requires at least 10%, 15% or 20% of project cost under the rules in 13 CFR 120.910. Bridge and construction loans often need more cash equity than a stabilized permanent loan.
How much down payment does an SBA 504 loan require?
Generally at least 10% of project cost. It is generally 15% if the business has operated for two years or less or the property is limited- or single-purpose, and 20% if both apply, under 13 CFR 120.910.
Is commercial down payment the same as residential?
No. Residential mortgages often have published percentage guidelines by loan type. Commercial equity is set deal by deal by each lender's credit policy and the property's risk.
Can seller financing count toward my down payment?
Sometimes, if the structure meets the lender's and (for SBA) the SBA's rules on subordination and repayment. It has to be disclosed and approved as part of the stack — never assume it will count the same as cash.
Do you finance commercial purchases outside Washington?
Yes. We work nationwide in states where NEXA Lending can legally fund. Send the property details and I'll confirm how your state and loan type fit.
Sources
- SBA: 504 loans
- eCFR: 13 CFR 120.910, Borrower contributions (504)
- SBA: SOP 50 10, Lender and Development Company Loan Programs (version 8.1)
- SBA Information Notice 5000-880695: Issuance of SOP 50 10 8.1
General information only, not legal, tax, or financing advice, and not an offer or commitment to lend. Program rules can change; confirm current requirements with the SBA and your lender.
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