The quick read: No, not in the sense of a deal with no equity in it. Bank underwriting standards require a borrower's initial hard equity, which the OCC's Comptroller's Handbook defines as "a borrower's tangible equity invested in a property including cash, unencumbered real estate (e.g., land), and materials for improvements." What an investor can do is replace their own cash with someone else's capital or with equity they already own: a seller note, a second property pledged as collateral, a borrowed contribution under SBA 504, mezzanine debt or preferred equity, or an assumed loan. Each substitute needs the senior lender's written consent, and each costs something in rate, control or risk. Which substitute a lender accepts is that lender's policy, so the fastest way to find a yes is to put the same structured deal in front of many lenders at once, which is what a brokerage does.
Can you buy commercial property with no money down?
You can occasionally close a commercial purchase without writing a down-payment check from your own account, but you cannot close one without equity, because bank underwriting standards require the borrower's initial hard equity and cap loan-to-value. Zero cash down only works when another party's capital or your existing property fills the gap.
The OCC's Comptroller's Handbook on commercial real estate lending lists, among the standards an effective bank policy sets, "minimum requirements for the borrower's initial hard equity (e.g., cash or unencumbered investment in the underlying property)" and "requirements for borrower equity such as specifying the amounts required, the acceptable types and sources of equity, and the timing of the equity contribution." That second line is the opening for a no-cash structure: the acceptable sources of equity are a policy choice, and policies differ by lender.
The ceiling on the senior loan is set by the interagency supervisory loan-to-value limits, which the handbook reprints from 12 CFR part 34. Banks set their own internal limits at or below these:
Improved commercial, multifamily and other nonresidential property (supervisory LTV limit): 85%
Commercial, multifamily and other nonresidential construction: 80%
Land development or improved lots: 75%
Raw land: 65%
A bank can lend above those limits only as an exception, and exceptions are rationed. Per the same guidelines, the aggregate of all loans above the supervisory limits "should not exceed 100 percent of total capital," and within that, loans on commercial, agricultural, multifamily or other non-1-to-4 family residential property "should not exceed 30 percent of total capital." Asking the same bank for a second loan to cover the down payment does not get around this: the handbook says that if a bank holds a first and second lien on a parcel and the combined commitment exceeds the limit, both loans are reported as nonconforming. That is why the gap is usually filled by someone other than the senior lender.
How do you get lenders to accept a deal with little cash down?
You get lenders to accept a low-cash structure by showing the same complete package, with the gap-filler named and documented, to many lenders at once, because whether a seller second or pledged collateral is acceptable is each lender's policy decision and differs from one lender to the next.
Option 1: a brokerage that structures the gap (our recommendation). YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. The 5-minute submit captures the deal and the equity stack you propose, our software matches it against 20,000+ loan programs and typically returns 5–8 matches, and the median first offer arrives in under an hour, from an institutional lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Our brokers then structure the seller note, the pledge or the mezzanine piece, and negotiate the consent terms on your side, because the consent language is where a no-cash deal is won or lost. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed. Submit your deal and the equity stack you have in mind.
Option 2: ask lenders one at a time. Your own bank knows you, and a relationship lender may accept a substitute it would refuse from a stranger. The cost is time: each lender reviews the structure separately, and a no from one tells you nothing about the next.
What can replace the down payment?
Five substitutes can stand in for a buyer's cash: a seller note, cross-collateral from property you already own, a borrowed contribution under SBA 504, mezzanine debt or preferred equity, and assuming the seller's existing loan. Each moves the gap to someone else's capital or your existing equity, and each has a catch.
Substitutes for a cash down payment (regulatory points from the OCC Comptroller's Handbook and 13 CFR 120.910, 120.912 and 120.131):
| Attribute | Seller note | Cross-collateral | SBA 504 borrowed contribution | Mezzanine or preferred equity | Loan assumption |
|---|---|---|---|---|---|
| Attribute Who funds the gap | Seller note The seller, who takes part of the price as a note | Cross-collateral Your equity in a property you already own | SBA 504 borrowed contribution The CDC or a third party lends your contribution | Mezzanine or preferred equity An outside investor behind the senior loan | Loan assumption The existing loan balance carries over |
| Attribute Consent condition | Seller note Senior lender permits the second lien and its terms | Cross-collateral Lender takes a lien on the pledged property | SBA 504 borrowed contribution If secured by project assets: subordinate to the 504 liens, no faster repayment without SBA's prior written approval | Mezzanine or preferred equity Set by the senior loan documents and any intercreditor terms | Loan assumption Lender and servicer approve the buyer |
| Attribute Who it fits | Seller note Buyers with a motivated seller | Cross-collateral Owners with equity elsewhere | SBA 504 borrowed contribution Operating businesses that occupy the building | Mezzanine or preferred equity Larger deals with an experienced sponsor | Loan assumption Deals where the existing loan suits the buyer |
| Attribute The catch | Seller note Lender may still require cash from the buyer | Cross-collateral The pledged property is at risk in a default | SBA 504 borrowed contribution Not available for passive investment property | Mezzanine or preferred equity Costly capital that is paid before you | Loan assumption You still fund the gap between price and balance |
Seller note
The seller carries part of the price as a subordinate note, so less of the price has to come from you. The worked example below is illustrative, not a quote:
Purchase price: $2,000,000
Senior bank loan at 75% of price: $1,500,000
Seller note at 15% of price: $300,000
Buyer's cash at 10% of price: $200,000, plus closing costs and reserves
Combined financing: 90% of price
Even with a generous seller, a 75% bank loan and a 15% seller note leave the buyer writing a $200,000 check. A seller willing to carry more, or a bank willing to lend more, closes the gap further, but the senior lender decides how much subordinate debt it will allow behind it. Our guide to combining seller financing with a bridge loan covers how that consent works on a short-term loan.
Cross-collateral
If you own another property with equity in it, the lender can take a lien on that property as additional collateral. The handbook gives the formula: the maximum loan under the supervisory limits is the sum, for each property, of its market value multiplied by the LTV limit for that property, less the senior liens on it. Illustrative example, our arithmetic: you buy a $1,000,000 building and pledge a second building worth $600,000 that carries a $200,000 mortgage. At an internal limit of 75% on both, the capacity is $750,000 plus $250,000 ($600,000 times 75%, less the $200,000 mortgage), or $1,000,000, which covers the full price. Closing costs are still cash, and the handbook tells banks to recalculate LTV whenever collateral is released or substituted, so expect a release price before the pledged building comes free.
SBA 504 borrowed contribution
Under 13 CFR 120.910, a 504 borrower contributes at least 10% of project cost, 15% for a business operating two years or less or for a limited or single purpose building, and 20% when both apply. Under 13 CFR 120.912, "the Borrower may borrow its cash contribution from the CDC or a third party," and if that loan is secured by any of the project assets, it must be subordinate to the 504 liens and may not be repaid faster than the 504 loan without SBA's prior written approval. Under 13 CFR 120.910(b), the contribution may come from any source except an SBA business loan program. The limit is occupancy: under 13 CFR 120.131, the borrower must occupy at least 51% of an existing building or 60% of new construction, so this route is for an operating business buying its own premises, not for an investor buying a rental.
Mezzanine debt or preferred equity
Mezzanine debt sits behind the senior mortgage and is typically secured by a pledge of the ownership interests; preferred equity is an investment in the ownership entity with a priority return. Both fill part of the gap and both are paid before the common equity. Whether the senior loan permits either one, and on what intercreditor or recognition terms, is set in the senior loan documents, so ask before you sign. Pricing is set deal by deal. See our mezzanine loan page for how the structure fits behind a senior loan.
Loan assumption
Taking over the seller's existing loan replaces part of the new financing, not your equity. Your cash is the gap between the price and the assumed balance, which can be large when the property has appreciated. The lender must approve you as the new borrower; the assumption guide covers that process.
What must the senior lender approve?
The senior lender must approve, in writing, any capital that sits beside or behind its loan: a seller's second lien, a lien on a second property, a borrowed contribution's terms, a mezzanine pledge or preferred-equity rights, and the buyer on an assumption. Closing a substitute the lender has not approved can put the senior loan in default.
Ask for each of these in the term sheet, not after it:
Seller note: whether a subordinate seller note is permitted, the maximum combined loan-to-value, and whether payments must stay on standby for a period
Cross-collateral: the release price and conditions for the pledged property
SBA 504 borrowed contribution: written confirmation from the CDC that the borrowed source is acceptable and, if secured by project assets, subordinate and repaid no faster than the 504 loan
Mezzanine or preferred equity: the intercreditor terms, including cure rights and what happens to control on a default
Assumption: whether the lender will require new equity or a paydown as a condition of approval
The handbook frames these as policy items each bank sets, so the answer you get from one lender is not the market's answer. That is the practical case for shopping the structure, not just the rate.
What does a no-money-down deal cost you?
A no-money-down structure costs you in rate, control and risk rather than cash, because every dollar that replaces your equity is a claim ahead of your profit: the seller note needs paying, the pledged property is exposed, and mezzanine or preferred capital takes its return before you. Debt coverage gets thinner too.
On the illustrative $2,000,000 purchase above, a $300,000 seller note at an illustrative 7% interest-only rate adds $21,000 a year of debt service on top of the bank payment. The property's income has to carry both, and a lender sizing the senior loan may test coverage on the combined payments. Closing costs, reserves and any capital work are still cash in almost every structure, so a buyer with truly nothing to invest is usually better served by bringing in an equity partner than by stacking debt. For where the cash a lender does require can come from, and how it is documented, see where the down payment on a commercial property comes from.
The bottom line
A commercial real estate loan with no money down is possible only in the narrow sense that your cash can be replaced. Hard equity, in the OCC's definition, is cash, unencumbered real estate or materials, and the supervisory limit on improved commercial property is 85% loan-to-value. A seller note, pledged collateral, an SBA 504 borrowed contribution for owner-users, mezzanine or preferred equity, or an assumed loan can fill the gap, each with the senior lender's written consent. Structure the stack before you shop it, and shop it widely.