Owner-occupied commercial real estate loans differ from investment property loans primarily in how the space is used and how lenders assess risk. When a business occupies more than 50% of the building, it typically qualifies as “owner-occupied,” which allows access to more favorable loan terms, including lower interest rates, higher loan-to-value ratios, and potentially SBA financing options. Because the property’s performance is tied to the operating business rather than external tenants, lenders often view owner-occupied properties as less risky. In contrast, investment commercial loans (the owner occupies less than 50%) depend on tenant income and lease stability, which generally results in stricter underwriting and higher equity requirements.
Every financial institution is different. Consult with bankers or lenders to determine which loan and terms would be the most appropriate for your situation.
