Commercial Refinance in Florida: What Changes Above Four Units

Educational content only. This article is for informational purposes and does not constitute financial, legal, or lending advice. Loan programs, rates, and eligibility requirements change frequently. Consult a licensed mortgage professional before making any borrowing decision. Mortgage Capital | NMLS# 1859012 | Licensed in Florida.

You need a commercial refinance in Florida once a property passes four units. The same applies to mixed-use, retail, office and industrial.

The review is different. The terms are shorter. And the property carries the loan rather than you.

Where residential ends

One to four units counts as residential, even if every unit is rented.

Five units and up is commercial, and the whole approach changes.

A shop below with flats above usually falls on the commercial side too. The income split decides it.

For one to four units, a DSCR loan is almost always cheaper and simpler.

How commercial underwriting works

The property's net income sits at the centre of the file.

Lenders work out a coverage ratio. Take the income after running costs and divide it by the loan payment.

Most want 1.20 to 1.25. That is higher than home DSCR loans ask for.

Your own income matters far less. Your net worth and cash on hand still do.

Terms are shorter than residential

Terms of five, seven or ten years are normal. The payment is spread over twenty or twenty-five.

That leaves a large balloon payment at the end.

You refinance, sell or pay it off. A thirty-year fixed barely exists in this market.

Plan the exit before you sign rather than eighteen months before the balloon.

What lenders look at in the property

The rent roll and the leases, and how many end in the next two years.

Who the tenants are. One tenant filling most of the space is a risk.

Real running costs, proven rather than projected.

The building's condition, often through a formal survey.

Florida-specific issues

Insurance is the biggest swing factor. Commercial premiums have climbed alongside home ones.

Wind and flood cover on coastal commercial property is hard to place at any price.

Taxes reset on sale with no homestead cap, and commercial values move fast.

Hurricane deductibles are often a percentage. On a bigger building that is a large bill to find.

Costs of a commercial refinance

An appraisal. Commercial ones cost thousands, not hundreds.

Often an environmental report, above all on old industrial or fuel sites.

Legal fees, because the loan papers get negotiated rather than handed to you.

Florida documentary stamp tax and intangible tax apply here as well, on the full new note.

Recourse and guarantees

On smaller commercial loans you usually sign a personal guarantee.

Loans without that guarantee exist on bigger, stronger properties, though carve-outs apply.

That guarantee is why lenders still study your own finances.

Read the carve-outs closely. They are where a loan without a guarantee quietly gains one.

When to stay residential instead

If the property has four units or fewer, stay residential. The rate and terms are better.

Two-to-four unit homes also carry higher loan limits, which reach further than investors expect.

Portfolio loans and blanket loans bridge the gap for growing residential portfolios.

Moving to commercial before you must costs you rate and term for nothing.

Cash-out on commercial

Most commercial lenders cap cash-out around 65% to 75% of value.

The coverage ratio still has to work at the higher payment, which is usually the real limit.

Uses are generally unrestricted, though lenders ask.

Improving the property often raises income and value together, which is the cleanest route to more proceeds.

Loan sizes and who lends

Local and regional banks dominate the smaller end, under about $5 million.

Credit unions lend on commercial in Florida and are often competitive.

Life companies and conduit lenders come in above that, with different terms and tighter documents.

The lender type matters more here than in residential, because there is no single agency standard.

Timeline

Sixty to ninety days is normal on a commercial refinance.

The appraisal alone often takes three to four weeks.

An environmental report adds more where one is required.

Start well before your balloon rather than three months out.

What to have ready

Rent roll, leases, and two years of operating accounts.

Your personal financial statement and tax returns.

The current note and any loan documents.

Insurance declarations, which on Florida commercial property are the line lenders scrutinise most.

Assumptions and prepayment

Many commercial loans carry prepayment protection: a lockout, a step-down, or yield maintenance.

Yield maintenance can be expensive enough to make an early refinance uneconomic.

Some commercial loans are assumable, which becomes a selling point if your rate is low.

Read both clauses before you sign, since they shape your options for the whole term.

Where to read more

Commercial lending sits outside the consumer mortgage rules, so the disclosures you get on a home loan do not apply.

The CFPB guide to owning a home covers residential lending, which is the useful contrast.

For commercial, your lawyer and your accountant matter more than any published guide.

Do not sign commercial loan documents without both.

The short version

Above four units the rules change: shorter terms, a balloon, and the property carrying the file.

Below five units, stay residential. The rate and the thirty-year term are worth keeping.

Where to start

Bring the rent roll, two years of accounts and your current loan terms.

We will tell you whether the property is truly commercial, or whether a home loan still fits.

That single question often saves an investor a point of rate and fifteen years of amortisation.

Start with a pre-approval.