Researching commercial mortgage rates online is a scattered and misleading task. Here is what all real estate investors and commercial owners deserve to know upfront – accurate commercial mortgage rates for commercial loans are not available online.


Here's why:


A benefit of our digital era should be robust information access and transparency. Most other commercial mortgage companies might provide estimated rates based on best case scenarios made available online. But those commercial loan rates are just that – unvetted and unreliable if there is no due diligence completed. The most fair and transparent way to answer the “what’s my rate” question is to give investors the methodology of determining commercial mortgage rates and then the tools to estimate their probable rate at any stage.

Commercial mortgage rates are usually a factor of three elements: the market index the lender has selected to use, the lender’s margin/spread over that index, and borrower selected program features.

The market index can be one of many indexes available to the public. The market index serves as a benchmark. It is a third-party index that the lender does not have control or influence over that will move with the market. Each index might arguably have certain benefits to the lender or borrower to be used (please discuss further with HarborWest). These indexes fluxuate daily. Some of the most common indexes used include:

Common Market Indexes


  • US Treasury Bonds (T-Bill)

  • Secured Overnight Finance Rate (SOFR)

  • London Interbank Offered Rate (LIBOR)

  • Interest Rate Swap (SWAP)

  • Constant Maturity Treasury (CMT)

  • Prime Rate (Prime)


The second component of determining commercial mortgage rates is understanding the lender’s spread/margin. This is why commercial loan rates are not available online. While indexes can be referenced online at any point, the margin or spread is determined solely by the lender on an individual basis. Lender spread is a determination of risk. The larger the level of risk in the commercial loan request, the higher the lender’s margin needs to be in order to compensate. Rate covers risk and the spread on the rate is the lender’s yield for financing that risk. Since every commercial loan request will have its own profile of risk and lender requirements and appetite are constantly changing, each commercial loan quote needs to have its own proper due diligence for an accurate representation. There are both qualification factors and program factors that can affect commercial interest rates. Qualification factors are determined with due diligence and would be risk-adjusted. Program factors are offerings provided by the lender and selected by the borrower and are usually optional.

Qualification Factors Affecting Rate (+/-)


  • Available Liquidity

  • Net Worth

  • Sponsor Experience

  • Credit Score

  • Past Credit Events

  • Property Type

  • Property Location

  • Quality & Condition

  • Appraised Value

  • Loan-to-Value (LTV)

  • DSCR Ratio

  • Debt Yield Ratio (DY)

  • Tenancy Risk

  • Tenant Quality

  • Historical P&Ls


Program Factors Affecting Rate (+/-)

  • Fixed Rate Period – Longer fixed rate terms (+Rate)

  • Non-Recourse – No personal guarantee (+Rate)

  • Prepayment Penalty – More flexible or no prepay (+Rate)

  • Interest-Only Periods – No principal paydown (+Rate)

  • Loan Amount – Certain loan program access (-Rate)

  • Loan-to-Value (LTV) – Lower LTVs with more equity (-Rate)

  • Banking Relationship or Deposits – Additional business (-Rate)

  • Additional Cross-Collateral – Additional equity & lower LTV (-Rate)

  • Paid Points – Upfront fee increasing lender yield (-Rate)

  • Lower Amortization – Expedited principal paydown (-Rate)

Since each individual loan request is going to have its own profile for qualification and program factors – its important to complete an introduction call with HarborWest and review your scenario and identify the qualification factors and program factors that would apply to your specific request to get a commercial loan rate estimate. The further step would be to submit documentation to HarborWest in order to process complimentary financing quotes and be able to compare negotiated offers side-by-side as a tool to select your final lender.