How much liquidity do commercial lenders require?
Commercial lenders typically require liquidity, meaning cash and easily accessed funds beyond the down payment, of 6 to 12 months of the new loan's debt service after closing, with agency multifamily loans often wanting 9 to 12 months and smaller DSCR loans sometimes as low as 3 to 6 months. Liquidity is verified separately from the down payment source and must remain in your accounts after closing costs are paid.
Typical liquidity requirements by loan type
| Loan type | Typical liquidity required after closing |
|---|---|
| DSCR loan, single property | 3 to 6 months of the full payment |
| DSCR loan, larger or multiple properties | 6 months |
| Bank commercial loan | 6 to 12 months of debt service |
| Agency small balance multifamily | 9 to 12 months of debt service |
| SBA loan | Working capital sized to the business, often 3 to 6 months of operating expenses |
| Bridge or hard money | 3 to 6 months of interest, sometimes replaced by an interest reserve inside the loan |
Ranges vary by lender.
What counts as liquidity
- Checking and savings accounts, seasoned 60 days or more.
- Brokerage accounts, at full value with most lenders.
- Retirement accounts, usually discounted to 60 to 70 percent of vested balance for taxes and penalties.
- Cash value of life insurance, sometimes.
What does not count
- Equity in other real estate.
- Available credit on lines of credit or credit cards.
- Unrealized gains on illiquid business interests.
- Funds already earmarked for the down payment or closing costs.
Why liquidity is checked after closing, not before
The requirement exists to confirm you have a cushion if the property underperforms or an unexpected expense arises, not just that you could afford the purchase itself. Lenders subtract the down payment and closing costs from your total liquid assets to see what remains.
A worked example
Borrower has $180,000 in checking and brokerage accounts. Down payment and closing costs on a $500,000 DSCR purchase total $130,000, leaving $50,000. If the full monthly payment is $2,800, that is about 18 months of reserves, comfortably above a typical 6-month requirement.
What to do if liquidity is thin
- Reduce the loan amount or down payment percentage if the lender's grid allows, freeing up more post-closing liquidity.
- Include retirement funds in the calculation if the lender counts them.
- Delay closing by a pay cycle or two if the gap is small.
- Choose a loan type with a lower liquidity requirement, such as a DSCR loan over an agency multifamily loan.
- Add a co-borrower whose liquid assets can be counted.
How CommFi handles it
Our lending desk checks your liquidity against the specific requirement of each loan type before you apply, so you know where you stand before committing to a property. It funds direct when it fits, and when the desk searches a database of 7,000+ lenders, it matches your liquidity to the lenders whose requirements you actually meet. Zero upfront fees.
Related reading
Related questions
- How much liquidity do I need for a commercial loan?
- Typically 6 to 12 months of the new loan's debt service after closing, with agency multifamily loans on the higher end and smaller DSCR loans sometimes as low as 3 to 6 months.
- Do retirement accounts count toward liquidity requirements?
- Usually, at 60 to 70 percent of vested balance to account for taxes and early withdrawal penalties.
- Is liquidity checked before or after the down payment?
- After. Lenders subtract the down payment and closing costs from your total liquid assets to confirm what remains as a cushion.
- Can I use a home equity line of credit as liquidity?
- No. Available credit on lines of credit generally does not count; lenders want actual cash or easily liquidated assets.
- What if I don't have enough liquidity for the loan I want?
- Reduce the loan amount, include retirement funds if the lender allows it, add a co-borrower, or choose a loan type with a lower liquidity requirement.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.