How banks and private lenders decide, side by side, and when each one makes sense.
If you’re financing a rental or commercial property, you have two main choices: a bank or a private lender. The right one depends less on the interest rate and more on how you qualify, what you’re buying, and how fast you need to close.
The short answer: If you have two years of tax returns that show strong income, good credit, and a standard property, a bank may get you the lowest rate. If your tax returns don’t show your real income, the property doesn’t fit a bank’s box, or you’re up against a deadline, a private lender is often the better fit.
Banks and conventional lenders mostly evaluate you. A typical bank will look at:
That works well for W-2 earners with clean finances. It works poorly for many real estate investors.
The most common reason is taxes. Self-employed investors and business owners often take legitimate write-offs that lower their taxable income. That’s smart tax planning, but it means the income on their returns looks low, even when their real cash flow is strong. The bank only sees the return.
Other common roadblocks:
Asset-based private lenders like CCIG mostly evaluate the property: what it’s worth, its income potential, and how much equity is in the deal. At CCIG, that means:
| Typical bank | CCIG (private lender) | |
|---|---|---|
| Tax returns | Usually 2 years required | Not required |
| Proof of income | Required | Not required |
| Credit score | Minimum score required | No minimum |
| Debt service ratio | Often required | Not required |
| Main focus | The borrower’s finances | The property |
| Property types | Standard properties preferred | 1–4 unit, multi-family, mixed-use, commercial |
| Interest rate | Often lower if you qualify | Typically higher than a bank |
| Loan term | Long-term | 30-year, fully amortized, no balloon |
Go with a bank if your tax returns clearly show strong income, your credit is good, the property is standard, and you have time. If you qualify easily, a bank will often offer a lower rate, and that’s worth taking.
One real example: a self-employed borrower in Westbrook, Maine couldn’t get financing for a two-family purchase through traditional lenders. We underwrote the property instead of his tax returns and closed the loan. See more funded deals.
“Private lender” covers everything from short-term hard money to long-term rental financing. Before you sign, ask:
Choose a bank if you qualify easily and want the lowest rate. Choose a private lender when the bank’s rules don’t fit your situation, your property, or your timeline. Many investors use both, depending on the deal.
Tell us about the property and a CCIG loan specialist will walk you through your options.
