Underwriting Tiers

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When arranging financing for the acquisition, refinance, or construction of commercial, multifamily, and investment properties, we evaluate financing options across three underwriting tiers as follows:

Institutional / Bank

TIER ONE

Alt-A

TIER TWO

Hard Money

TIER THREE

Not all loan requests can be funded at the Tier One, Institutional / Banking level, which means alternative lending solutions will be needed, including Alt-A or Hard Money. Most loan programs are available across all tiers. However, rates, terms, leverage, and fees will vary depending upon whether the loan is funded at the Institutional, Alt-A, or Hard Money level.

TIER ONE: INSTITUTIONAL

In most cases, borrowers looking for the best rates on long-term loans will seek Institutional financing. Bridge loans are also available through Institutional Lenders. The most common Institutional loan products include:

  • 5-Year with 25 to 30-year amortization
  • 7-Year with 25 to 30-year amortization
  • 10-Year with 25 to 30-year amortization
  • 1 to 3-Year Bridge Loan with Interest Only Amortization

In most cases, multifamily property loans will have 30-year amortization. Commercial properties, such as office, retail, and industrial usually have 25-year amortization, or up to 30-years if we arrange a CMBS loan.

Borrowers that do not qualify for Institutional or Alt-A financing, or are in need of short-term loans will usually go with a Hard Money Bridge loan. These loans are 1 to 3-year, interest only loans. The rate is often fixed or floating on a monthly basis depending upon the lender.

TIER TWO: ALT-A

When Institutional financing is not available, Alt-A loans are a good option for long-term loans or properties that just miss conforming financing guidelines. The most common Alt-A loan products include:

  • 5-Year with 25 to 30-year amortization
  • 7-Year with 25 to 30-year amortization
  • 10-Year with 25 to 30-year amortization
  • 30-Year Fixed (available only on 1 to 4-unit residential properties by Alt-A lenders)

Alt-A rates are usually 1 to 3% higher than Institutional rates.

TIER THREE: HARD MONEY

When Institutional or Alt-A financing is not available, or there is a need to close quickly, Hard Money loans are a good option for short-term financing, and in some cases long-term. Most Hard Money loans are 1-2 years, but 5 and 30-year fixed Hard Money loans are also available.

  • 1-Year with interest only amortization
  • 2-Year with interest only amortization
  • 3-Year with interest only amortization
  • 5-Year with 30-year amortization
  • 30-Year with 30-year amortization

Hard Money rates are usually 4% to 7% above the 30-Day SOFR index rate. Hard Money rates are often fixed for the 1 to 3-year interest only period, or adjustable on a monthly basis based on SOFR or the Federal Prime Rate.

Benefit to the Client: You are able to evaluate your client’s loan requirements at the Institutional, Alt-A, and Hard Money level, providing more options, unlike a single Bank or Private Lender. 

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