The debt decision library
Underwriting and credit
Reconcile financial evidence, lender conventions, sizing constraints, sponsor support, and downside scenarios.
Underwriting turns documented property facts into a constrained financing decision. The useful result is more than a loan amount: it explains which test limits proceeds, which assumptions drive that test and how the balance changes as funds are advanced. This path begins with competing sizing constraints and then follows construction funding through time. Preserve units and timing throughout; annual income, monthly payments, commitments and funded balances answer different questions.
Why do lenders quote different loan amounts for the same property?
Their accepted cash flow, valuation, payment convention or required sizing criteria may differ. Reproduce each lender’s calculation using its stated assumptions before attributing the difference to pricing or aggressiveness. The lowest applicable constraint can change between proposals.
What should be done with a future commitment?
Record when and under what conditions it can become funded principal. Until then, it is neither cash available to the sponsor nor necessarily a balance accruing the same interest as funded debt. Read the actual fee and advance provisions.
A path through this collection
Identify the binding constraint
Calculate each applicable limit separately and retain the minimum. Show accepted cash flow, value and debt-service assumptions beside the result so a reviewer can explain why one test controls.
Follow principal through the draw schedule
Distinguish initial funded debt, new advances, capitalized amounts and remaining availability. Match interest to the balance and accrual convention assumed for each period.
Reconcile proceeds to the actual need
Compare the calculated loan with transaction uses and timing. A model that sizes sufficient total debt can still leave insufficient cash at closing or during reimbursement delays.
What you should have when you finish
- A sizing worksheet showing all tested limits and the binding result.
- An identified treatment of fees, interest and future advances.
- A reconciliation from modeled proceeds to sponsor cash required by phase.
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