How lenders size
a commercial loan.
Commercial proceeds are not a negotiation that starts from what you ask for. They are the output of two constraints - and one of them is binding your deal right now.
By Christiaan De Leeuw · Stonehaven Lending · Updated July 30, 2026
A commercial lender sizes your loan as the lesser of two numbers: the loan the property's income can service at a target debt-service coverage ratio (DSCR, commonly around 1.20x-1.30x for stabilized assets), and the loan the property's value supports at a maximum loan-to-value (LTV). Whichever produces the smaller loan is the binding constraint - and knowing which one binds tells you exactly what to work on to change the outcome.
DSCR: income covers debt.
Underwriting rebuilds your net operating income from the rent roll and operating statements - real rents, real vacancy, real expenses, plus reserves. That NOI, divided by the target coverage ratio, sets the debt service the property is allowed to carry; the rate and amortization then translate that payment into a loan amount. Higher NOI, longer amortization, or a lower rate all push this number up.
LTV: value caps leverage.
The appraisal sets the value; the lender's maximum LTV for your asset class and market sets the ceiling. When LTV binds, the conversation is about value and equity - the appraisal's assumptions, the purchase price, and how much you are putting in. No amount of income moves an LTV-bound loan.
Work the constraint that binds.
This is the highest-leverage insight in commercial finance and the reason our commercial loan calculator names the binding constraint instead of just printing a number. DSCR-bound? Fight for income: contract rents, expense recovery, amortization, rate. LTV-bound? Fight for value: the appraisal narrative, comparable selection, or accept the equity check. Weeks get wasted negotiating the wrong lever.
What else shapes proceeds.
Debt yield minimums, stress-tested rates, tenant concentration, lease rollover, sponsor experience and liquidity - lenders layer these on top of the two headline constraints, and different capital sources weight them differently. That spread between lenders is precisely where a broker earns their keep: the same deal can support meaningfully different proceeds depending on where it is placed.
See which constraint binds yours.
Send the basics and get honest feedback from a capital specialist within 48 hours - real structure, real numbers, no obligation.