For most investors and business owners, the down payment is the first real hurdle in a commercial real estate deal. It determines how much capital you need on hand, how large a property you can pursue, and often what terms a lender will offer. Yet there is no single answer to "how much do I need?" — the number depends heavily on the loan type, the property, and your own financial profile.
As a general rule, commercial real estate down payments range from about 10% to 35% of the purchase price, with most conventional deals landing between 20% and 30%. That is meaningfully more than the 3% to 20% typical of residential financing, and the gap reflects how lenders view risk on income-producing property. For a fuller comparison, see our guide on how commercial and residential loans differ. Understanding where your deal is likely to fall — and what levers can move it — is the key to planning your capital and avoiding surprises.
This guide breaks down down payment expectations by loan type in 2026, the factors that push them up or down, and several strategies experienced investors use to reduce the cash they bring to closing.
Your down payment is not a fixed price tag — it is an outcome of the loan type, the property's strength, and how you structure the deal. The more leverage you understand, the less cash you often need.
Down Payment by Loan Type in 2026
The single biggest determinant of your down payment is which financing program you use. Each loan type carries its own loan-to-value (LTV) limits, and your down payment is simply the gap between the purchase price and the loan amount.
SBA 504 Loans — As Low as 10%
For owner-occupied commercial property, the SBA 504 program offers one of the lowest down payment requirements available. Its three-party structure — a bank first mortgage, a Certified Development Company second mortgage, and borrower equity — typically requires just 10% down from the borrower. Startups or special-use properties may be asked for 15% to 20%, but for an established business occupying the space, 504 financing keeps cash out of pocket remarkably low while delivering long, fixed, below-market rates.
SBA 7(a) Loans — 10% to 15%
The SBA 7(a) program is more flexible in how funds are used and generally requires 10% to 15% equity. Stronger credit, collateral, and cash flow can push the requirement toward the lower end, while higher-risk profiles move it up. Like the 504, it is intended for owner-occupied real estate rather than passive investment.
Conventional Bank Loans — 20% to 30%
Conventional commercial mortgages from banks and credit unions typically require 20% to 30% down, with 25% being a common benchmark. Requesting a lower rate, a cash-out component, or higher leverage can prompt the lender to ask for more equity. Banks reward relationships and strong financials, which can sometimes improve both your rate and your required down payment.
Agency Multifamily Loans (Fannie Mae / Freddie Mac) — Around 20%
For apartment properties of five or more units, agency loans allow up to roughly 80% LTV, translating to about 20% down for qualifying, stabilized properties. These programs offer the lowest fixed rates in the market and non-recourse structures, but underwriting is rigorous and the property must demonstrate strong, stable cash flow.
CMBS (Conduit) Loans — 25% to 35%
CMBS loans generally cap LTV in the 65% to 75% range, implying a 25% to 35% down payment. They suit stabilized properties with predictable income and reward borrowers who can accept the structure's rigidity in exchange for non-recourse, fixed-rate financing.
Bridge and Transitional Loans — Varies Widely
Bridge loans are sized against the property's current and projected value and the business plan rather than a simple purchase-price LTV. Equity requirements vary widely with the project's risk, but investors should generally expect to contribute 20% to 35% or more, particularly for value-add or unstabilized assets.
DSCR Investor Loans — 20% to 25%
For investors financing income property without traditional income documentation, DSCR loans typically require 20% to 25% down, with stronger cash flow and credit sometimes improving terms. The property's debt service coverage, more than your personal income, drives both approval and leverage — you can estimate yours with our DSCR calculator.
Owner-Occupied vs. Investment Property
One of the most important distinctions is whether you will occupy the property. Lenders view owner-occupied commercial real estate as lower risk, because the business has a direct stake in the property's success. That is why owner-occupied SBA programs allow down payments as low as 10%, while purely passive investment properties generally require 20% or more. If your business will occupy a majority of the space, you may have access to far more favorable leverage than an investor buying the same building to lease out.
What Moves Your Down Payment Up or Down
Even within a single loan type, several factors influence where your specific number lands:
- Credit and financial strength. Higher credit scores, lower existing debt, and strong liquidity can reduce required equity; weaker profiles increase it.
- Property cash flow (DSCR). A property with robust income relative to its debt gives the lender more comfort, sometimes supporting higher leverage and a lower down payment.
- Property type and condition. Stabilized, in-demand assets command better leverage than special-use, transitional, or higher-volatility properties.
- Market strength. Properties in strong, liquid markets typically support higher LTVs than those in thin or declining ones.
- Recourse. Accepting a personal guarantee (a recourse loan) can sometimes unlock higher leverage; non-recourse financing often comes with more conservative LTVs.
- Loan size and structure. Cash-out components, lower requested rates, and certain structures can all prompt lenders to require additional equity.
LTV vs. LTC: Two Ways Lenders Size Equity
For acquisitions, lenders generally think in terms of loan-to-value (LTV) — the loan as a percentage of the property's appraised value. For construction and value-add projects, they often use loan-to-cost (LTC) — the loan as a percentage of total project cost, including purchase, renovation, and soft costs. Your equity contribution is the remainder under whichever measure applies. Understanding which metric a lender is using helps you anticipate how much cash a project will actually require.
Strategies to Reduce Your Cash Out of Pocket
A large down payment is not always a hard ceiling on what you can do. Experienced investors use several legitimate strategies to stretch their capital:
- Use owner-occupied SBA financing. If you qualify, SBA 504 or 7(a) financing dramatically reduces upfront equity for properties your business will occupy.
- Negotiate seller financing. A motivated seller may finance part of the purchase price, reducing the cash you need at closing — though often in exchange for higher rates or a balloon.
- Bring in preferred equity or mezzanine debt. These capital layers can fill the gap between your senior loan and the equity you have available, reducing the common equity you must contribute. (See our guide to preferred equity vs. mezzanine debt.)
- Partner with joint-venture equity. Bringing in an equity partner lets you pursue larger deals than your own capital would allow, in exchange for sharing the upside.
- Recycle equity from existing assets. A cash-out refinance on a property you already own can fund the down payment on your next acquisition.
Each of these approaches changes the economics and control of a deal, so the right choice depends on your goals, your cost of capital, and your tolerance for sharing returns. This is precisely where structuring the capital stack thoughtfully pays off.
The most capital-efficient investors rarely fund deals from a single checkbook. They combine senior debt, gap capital, and partner equity to control more property with less of their own cash — without overleveraging the deal.
Planning Your Down Payment
Before you pursue a commercial property, model your likely down payment across the loan types your deal might qualify for, and stress-test it against the factors above. Knowing whether you are looking at 10%, 25%, or 35% — and understanding the strategies that can lower that figure — lets you size your search realistically and approach lenders with confidence. The investors who close are the ones who plan their equity before they fall in love with a property, not after.
Brookmont Capital Ventures is a commercial real estate debt and equity advisory firm headquartered in Washington, DC. The firm provides capital structuring, financing strategy, and advisory services to real estate owners, developers, and investors across a broad range of asset types and transaction structures. Brookmont focuses on disciplined execution and long-term capital alignment for its clients.
Learn more at brookmontcapital.net