Lenders determine the maximum loan for a stabilized property by considering several key factors, including the property's income and expenses, the loan-to-value ratio, the debt service coverage ratio, and the borrower's creditworthiness. The property's income and expenses are a crucial factor in determining the maximum loan amount. Lenders look at the property's rental income and operating expenses to calculate the property's net operating income (NOI). The NOI is then used to determine the property's debt service coverage ratio, which is the amount of money available to make loan payments after paying all operating expenses. A high debt service coverage ratio means that the property has a strong ability to generate enough income to make loan payments, which makes the property a more attractive investment for the lender. The loan-to-value ratio (LTV) is another important factor in determining the maximum loan amount. LTV is calculated by dividing the loan amount by the appraised value of the property. Lenders typically have a maximum LTV limit, and properties with a higher LTV are considered higher risk and may result in lower loan amounts. The borrower's creditworthiness is also taken into account when determining the maximum loan amount. The lender will look at the borrower's credit score, income, and debt-to-income ratio to determine their ability to repay the loan. If the borrower has a low credit score, high debt-to-income ratio, or limited income, the lender may choose to reduce the loan amount or deny the loan entirely. In addition to these factors, the lender may also consider local market conditions, the property's location and age, and the overall health of the real estate market when determining the maximum loan amount for a stabilized property. The maximum loan amount for a stabilized property is determined by a combination of factors including the property's income and expenses, the loan-to-value ratio, the debt service coverage ratio, and the borrower's creditworthiness. The lender's goal is to balance the risks and rewards of lending money for the purchase or refinance of a stabilized property and make a loan decision that is in their best interests. Meet our team of experienced commercial real estate financial advisors.