How Much Down Payment Do You Need for Commercial Real Estate in Texas?

The first question every new commercial real estate buyer in Texas asks is always some version of: how much do I need to put down? The honest answer is that it depends, and anyone who gives you a single number without asking what loan product you are using does not know what they are talking about. Commercial real estate is not like residential. There is no universal 20 percent rule. Down payment requirements swing from 10 percent to 45 percent depending on the loan product, the property type, and the borrower profile.

Here is what the actual numbers look like across the Dallas-Fort Worth market, program by program, as we see them on live deals.

SBA 504: 10 percent down on owner-occupied real estate

SBA 504 is the lowest down payment on commercial real estate available in Texas. Ten percent from the borrower on owner-occupied property, with the other 90 percent split between a conventional bank (50 percent) and an SBA-backed CDC debenture (40 percent). Special-use properties (hotels, gas stations, car washes, assisted living) typically require 15 to 20 percent instead of 10. First-time buyers and experienced operators get the same minimums. The SBA does not penalize you for being new to commercial real estate as long as your business has the cash flow to service the debt.

SBA 7(a): 10 percent down with more flexibility

SBA 7(a) also allows 10 percent down on owner-occupied real estate. The big difference from 504 is that 7(a) is a single loan from a single lender (not the bank-plus-CDC split structure), which can simplify the closing but caps the loan at $5 million and usually comes with a variable rate pegged to WSJ Prime. For smaller DFW deals or for borrowers who need to finance working capital and equipment alongside the real estate, 7(a) wins. For straight real estate purchases above $1.5M, 504 is usually better because of the long-term fixed rate.

Conventional owner-occupied commercial mortgage: 20 to 25 percent down

Outside the SBA programs, owner-occupied commercial mortgages from banks in Texas typically want 20 to 25 percent down. You give up the low SBA down payment and pay more equity, but you also skip the SBA paperwork, the guarantee fee, and sometimes the 60-to-90-day closing timeline. For a well-capitalized business buying a small building in Dallas or Fort Worth, conventional is worth considering. For anyone who cares about preserving cash, SBA almost always wins on pure math.

Agency multifamily: 20 to 25 percent down on apartment buildings

Fannie Mae DUS and Freddie Mac (Optigo and SBL) both allow up to 80 percent LTV on stabilized DFW multifamily, which means 20 percent down. HUD 223(f) goes higher, up to 85 percent on market-rate deals. These are the lowest down payment programs available for pure investment multifamily (not owner-occupied) in the country. On a $5M apartment building in Lewisville, that is $1M down with agency versus $1.5M with a bank. The agency advantage is meaningful. For a full walkthrough of the agency, HUD, bank, and bridge options on Dallas apartment deals, see our guide to financing an apartment building in Dallas.

Industrial, office, retail investment property: 25 to 35 percent down

Non-multifamily investment commercial real estate in DFW typically comes with tighter leverage. Expect 25 to 30 percent down on stabilized industrial through a life insurance company or CMBS. Office runs 30 to 35 percent in the current environment, more if the tenancy is weaker. Retail varies widely by anchor credit and tenant mix. Hospitality is the tightest of the group, with 30 to 40 percent equity on the table for most hotel financing.

Commercial bridge loans: 25 to 35 percent equity at close

Bridge loans on DFW value-add deals typically fund 70 to 75 percent of as-is value at close, which means the sponsor brings 25 to 30 percent at acquisition. You also need reserves for renovation costs, interest carry during the renovation period, and lender-required working capital reserves, which push the true equity contribution higher on most deals. A borrower planning a 25 percent down bridge deal usually shows up with 30 to 35 percent of total cost once reserves are added in.

Ground-up commercial construction: 30 to 40 percent equity

Construction loans are the most equity-heavy product in commercial real estate. DFW construction lenders typically fund up to 65 to 70 percent of total project cost, which means the sponsor brings 30 to 35 percent as equity. Pre-leased deals with credit tenants can push leverage higher. Fully speculative ground-up is harder right now and may require 35 to 40 percent equity plus completion and debt service reserves.

Hard money: 35 to 45 percent equity

Private hard money lenders in the DFW market underwrite to the collateral rather than the borrower's credit, and they compensate for the risk with lower LTV. Expect 55 to 65 percent of as-is value on most hard money deals, which means 35 to 45 percent equity at close. Some specialty hard money lenders will go higher on exceptional collateral or strong borrower relationships. Hard money exists to close fast deals where a bank cannot move in time, and the economics only make sense if the hold period is short.

What actually determines my commercial real estate down payment in Texas?

Five things. The loan product. The property type. The sponsor experience level. The in-place cash flow. And the specific lender's appetite on the day they quote the deal. A 200-unit stabilized multifamily in Plano with a seasoned sponsor might get 78 percent LTV from Fannie. A Class B office building in the same zip code with a short WALT might not break 60 percent. Same submarket, same week, same broker, different down payment answers. Always run the actual numbers before you make offers. In-place cash flow in particular drives the leverage math through the lender's DSCR calculation, which is almost always more conservative than the seller's pro forma.