The differences between commercial and residential loans may seem cut-and-dry, but they’re not always obvious. Determining which type of loan you require can be confusing at times, and being prepared before you speak with a lender may save you some time.

Residential mortgage loans are intended for properties that have one to four family units. Anything above that, or a property intended solely for business (not a dwelling), falls under a commercial loan.

When you require a residential loan, your personal income, debt and ability to repay a loan are reviewed before you’re approved for a mortgage. If you need a commercial loan, the property itself is evaluated for past income and expenses. This usually requires a few years of historical figures. Your lender will want to see the income that can be generated from the building, compared to what will be owed.

It is important to note that if you’re interested in obtaining a residential loan, and wish to put it under the name of a limited liability company (LLC), you may not be able to. Lenders are under strict guidelines as to which type of loan they’re able to offer an LLC. There may be an opportunity to transfer at a later time, but you would need to consult your attorney or lender.

If you’re looking for a hard money loan in Atlanta, we may be able to help you.

Call us at 404-814-1644 or contact us online to find out whether you might qualify for this type of funding. In the meantime, check to ensure that you meet our loan criteria. Our loan amounts can be up to 65 percent of the after-repaired value of the collateral—and if you use the loan for renovation or construction, the loan amount can be based on the collateral’s improved value.

Read our frequently asked questions and take a few minutes to learn about the hard money loan process.