The bank determines a property's coverage value to minimize their risks, often set at 70% of the mandatory sales value. Financing up to this coverage value is considered less risky for banks. Planning to purchase real estate">commercial real estate and the bank is only willing to finance the collateral value? Here are some example calculations:
Appraised value: 200,000
Foreclosure value: 0.85 * 200,000 = 170,000
Mortgage value: 0.7 * 170,000 = 119,000
This means the mortgage lending value is 59.5% of the appraised value, and you will need to finance 40.5% yourself.
