For financing purposes, lenders define commercial property as:
		A building that contains only non-residential units - such as an office building
		A space such as a shopping center, gas station or factory
		A building with five or more rental apartments
		A rental property containing apartments, as well as one or more commercial spaces - such as stores or offices. This is known as a mixed-use property.

Lending institutions handle commercial and residential financing differently, particularly in areas such as rates and loan programs. For example, you'll rarely see the "classic" residential 30-year fixed mortgage apply to a commercial property. Instead, commercial mortgages are composed of two types: 1) adjustable rate with either balloon payments or fully self-liquidating; or 2) 10- or 15-year fixed rate self-liquidating mortgages. Lenders also oversee commercial and residential financing through separate departments.

Perhaps the most important distinction between commercial and residential lending is the criteria lenders use to determine if they will extend financing, and to what dollar amount. On a residential mortgage, banks look at the income and expenses of the applicant. With a commercial mortgage, however, the qualification formula is based on the income and expenses of the property itself.

Lenders usually are willing to finance up to a maximum of 75% of the appraised value of a commercial property, or the purchase price, whichever is lower. Higher loan to values are rare and expensive exceptions. The bank also will examine whether a borrower is in a good financial position and has acceptable credit. But lenders will not use personal income in their qualifying formulas.