Commercial Real Estate Loans in Indiana: Your 2025 Investor’s Guide

Indiana’s dynamic commercial property market is primed for growth in 2025, making it an ideal destination for investors seeking opportunities in office, retail, industrial, and multifamily assets. Whether you’re eyeing Indianapolis’s bustling downtown or emerging corridors in South Bend, understanding your commercial real estate loan options is crucial to executing successful acquisitions and developments.

2025 Indiana Commercial Mortgage Market Overview

The Hoosier State continues to attract both in-state and out-of-state investors with:

• Competitive pricing in secondary and tertiary markets like Fort Wayne, Evansville, and Muncie
• Strong industrial growth corridors in northwestern Indiana (Hammond, Gary, Portage)
• Robust healthcare/biotech development in Indianapolis’s research districts
• Steady retail and mixed-use redevelopments in Bloomington and Lafayette

Average Indiana commercial real estate loan rates (as of Q2 2025):

Need capital? GHC Funding offers flexible funding solutions to support your business growth or real estate projects. Discover fast, reliable financing options today!

Test Your Expertise: The Complexities of the 1031 Exchange

As a sophisticated real estate investor, you understand that the 1031 Exchange is a cornerstone strategy for tax deferral and wealth accumulation. But beyond the basics, the intricacies of the 1031 Exchange rules can pose significant challenges. This quiz is designed to test your in-depth knowledge and highlight critical nuances that separate casual investors from true experts in 1031 Exchange transactions.

Instructions: Choose the best answer for each question.

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Page 1 of 5

Question 1: Understanding "Like-Kind" in a 1031 Exchange

Which of the following scenarios most likely qualifies as a like-kind property exchange under IRS Section 1031, allowing for 1031 Exchange tax deferral?

a) An investor exchanges a portfolio of publicly traded REIT stocks for a commercial retail building. b) An investor exchanges their primary residence, used for personal living for 15 years, for a duplex intended for rental income. c) An investor exchanges raw land held for appreciation in Texas for a stabilized apartment complex in Florida, both held for investment. d) An investor exchanges a classic car collection (personal property) for a single-family rental home (real property).

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Question 2: Navigating the 45-Day Identification Period for a 1031 Exchange

An investor sells a multi-family property on June 15th for a 1031 Exchange. According to the strict timelines, by what date must they identify their replacement properties to comply with the 1031 Exchange requirements?

a) July 30th of the same year, as the 45-day period includes weekends and holidays. b) August 29th of the same year, allowing for an extra 45 days if needed. c) December 12th of the same year, aligning with the 180-day completion period. d) January 1st of the following year, if they plan to file for an extension.

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Question 3: The Role of a Qualified Intermediary (QI) in a 1031 Exchange

Why is the engagement of a Qualified Intermediary (QI) absolutely critical for the validity of a 1031 Exchange?

a) The QI provides investment advice and helps the investor choose the best replacement property for their 1031 Exchange strategy. b) The QI acts as a liaison with the IRS, directly negotiating tax liabilities related to the 1031 Exchange process. c) The QI holds the proceeds from the relinquished property's sale, preventing the investor from having "constructive receipt" of funds, which would invalidate the 1031 Exchange. d) The QI provides legal and tax advice to ensure the 1031 Exchange is perfectly compliant

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Question 4: Understanding "Boot" and its Impact on a 1031 Exchange

An investor sells a commercial building with $500,000 in equity for a 1031 Exchange. They purchase a replacement property for $450,000, effectively reducing their debt by $50,000. What is the tax implication of this scenario within the 1031 Exchange framework?

a) The entire 1031 Exchange is disqualified because the investor "traded down" in value. b) The $50,000 in reduced debt is considered "boot" and will be immediately taxable as partial gain in this 1031 Exchange. c) There are no immediate tax implications, as the primary goal of the 1031 Exchange is only about the "like-kind" nature of the properties. d) The investor can defer the $50,000 as long as they pay off other personal debts with the funds, still qualifying for a full 1031 Exchange.

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Question 5: Advanced 1031 Exchange Strategies & Flexibility

An investor aims to sell a highly appreciated single-tenant retail property and replace it with multiple smaller, diversified multi-family units to spread risk. Which of the following 1031 Exchange identification rules best allows for this diversification strategy, maintaining eligibility for a 1031 Exchange?

a) The "Three Property Rule," where the investor can identify up to three properties of any value, regardless of the relinquished property's value, for their 1031 Exchange. b) The "200% Rule," allowing identification of any number of properties, provided their aggregate fair market value does not exceed 200% of the relinquished property's value for the 1031 Exchange. c) The "95% Rule," which states that if more than three properties are identified, the investor must acquire at least 95% of the aggregate value of all identified properties to qualify for the 1031 Exchange. d) All of the above are valid identification rules within a 1031 Exchange, offering flexibility for various investment strategies.

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The Ultimate DSCR Loan for Rental Property Quiz

Are you looking to expand your real estate investment portfolio? A DSCR loan might be the perfect tool to help you achieve your goals without relying on traditional income documentation. Test your knowledge with this quiz to see if you're ready to master the intricacies of a DSCR loan for rental property.

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Page 1 of 5

What is the primary factor a lender considers when approving a DSCR loan for rental property? A) The borrower's personal income and debt-to-income (DTI) ratio. B) The borrower's credit score and employment history. C) The property's potential rental income compared to its monthly expenses, known as the Debt Service Coverage Ratio. This is the key metric for a DSCR loan for rental property eligibility and approval. D) The total value of the borrower's existing investment properties and personal savings.

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How does a DSCR loan for a rental property differ from a conventional mortgage for a personal residence? A) A conventional mortgage requires a DSCR calculation, whereas a DSCR loan for a rental property does not. B) A DSCR loan for a rental property primarily focuses on the property's cash flow, allowing investors to qualify without traditional income verification, unlike a conventional mortgage which is based on personal income and liabilities. C) A conventional mortgage has a higher interest rate and stricter requirements than a DSCR loan for a rental property. D) A DSCR loan for a rental property is only available for commercial properties, not residential rental properties.

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What is an ideal Debt Service Coverage Ratio (DSCR) for a lender when evaluating a DSCR loan for a rental property? A) A DSCR of 0.75, indicating the property generates 75% of the income needed to cover its debt service. B) A DSCR of 1.00, meaning the property's income exactly equals its debt service. C) A DSCR of 1.25 or higher, as this indicates the property's income is greater than its expenses, making it a strong candidate for a DSCR loan for a rental property and providing a buffer for unexpected costs. D) A DSCR of 2.00, which is the standard minimum for all investment properties, regardless of location or market conditions.

Page 4 of 5

Which of the following expenses are typically included in the calculation of the Debt Service Coverage Ratio for a DSCR loan for a rental property? A) The property's mortgage payment (principal and interest), property taxes, and insurance, which are the core components used to determine if the property can support the debt. B) The property's mortgage payment, property taxes, insurance, and the borrower's personal credit card debt. C) The property's monthly rental income and all utility bills, regardless of who pays them. D) Only the principal and interest payment of the loan, as other expenses are not considered in a DSCR loan for a rental property calculation.

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Who would most benefit from using a DSCR loan for a rental property? A) A first-time homebuyer with a W-2 salary and a high debt-to-income ratio, who is looking to purchase a primary residence. B) A seasoned real estate investor with multiple properties who wants to expand their portfolio without using personal income to qualify, making a DSCR loan for a rental property the ideal financing solution for their needs. C) Someone looking to finance a primary residence with a low down payment and a government-backed loan. D) An individual with a very low credit score who cannot qualify for any other type of loan.

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• Commercial Mortgages: 6.15% – 7.35% (fixed), 6.00%+ (floating)
• Bridge Loans: 8.00% – 11%
• Construction Loans: 7.25% – 9.00%
• Multifamily Loans (fixed): 5.50% – 6.90%

Key Commercial Real Estate Districts in Indiana

1. Indianapolis Downtown Mile Square – Office towers, mixed-use revitalization, convention/tourism hubs
2. Northwest Indiana Industrial Corridor (Hammond, Gary, Portage) – Demand for distribution centers & light manufacturing
3. Carmel Midtown & Arts District – Upscale office and retail, Class A apartments
4. Bloomington IU Campus Vicinity – Student, medical, and retail-anchored multifamily
5. Fort Wayne South Anthony Corridor – Redevelopment of retail and light industrial assets
6. Evansville Downtown Riverfront – Historic hotels, office conversions, and restaurant clusters
7. Fishers Technology Park – Suburban headquarters and R&D facilities

Top Commercial Lenders in Indiana 2025

• Old National Bank – Indiana’s largest homegrown lender, full suite of CRE loans
• Horizon Bank – Broad bridge, construction, and perm loan offerings for mid-market projects
• First Merchants Bank – Strong presence in multifamily and retail financing
• Star Financial Bank – Construction and owner-occupant CRE loans
• PNC Bank – National player with specialty lending teams for Indiana
• Live Oak Bank – SBA 504 and 7(a) commercial property loans

2025 Guide: Commercial Mortgages in Indiana

Commercial mortgages remain Indiana’s foundation for CRE acquisition and refinance. These permanent loans typically finance stabilized assets—office buildings, shopping centers, industrial parks, or mixed-use developments.

Indiana Commercial Mortgage Features (2025):

• Loan amounts: $500,000 to $20 million+
• Typical terms: 5, 7, 10, or 15 year fixed rates, 20-25 year amortization
• Recourse and non-recourse options
• Loan-to-Value: 65%–80%
• Eligible properties: Office, retail, industrial, mixed-use, warehouse, hospitality
• Custom covenants for property type and borrower experience

Case Study: Indianapolis Office Portfolio Refinance

Sponsor: Local investor syndicate
Asset: Three-building Class B office park (92% leased)
Loan: $4.8 million permanent commercial mortgage from Horizon Bank, 6.45% fixed, 10-year term, 75% LTV.
Outcome: Refinancing increased cash flow by 0,000/year, enabled new tenant improvements.

Step-by-Step: Applying for a Commercial Mortgage in Indiana

1. Pre-qualification: Share property financials, rent roll, P&L, and borrower background with selected lender(s).
2. Loan Proposal & LOI: Lender issues terms sheet outlining loan amount, rate, fees, closing timeline.
3. Due Diligence: Order appraisal, Phase 1 environmental review, title, and site inspection. Lender reviews leases and borrower credit.
4. Underwriting: Full analysis of DSCR (Debt Service Coverage Ratio), global cash flow, and borrower net worth.
5. Commitment & Closing: Upon approval, lender funds the loan and records the mortgage. Closing typically 45–60 days post-application.

Bridge Loans for Property Transitions

✅ Small Business Resources 

• SBA – Small Business Administration
  https://www.sba.gov

• SCORE Mentors (Free Mentoring & Workshops)
  https://www.score.org
• Small Business Development Centers (SBDC)
  https://americassbdc.org

Are You an SBA Real Estate Loan Expert?

Test your in-depth knowledge on using SBA Loans for owner-occupied commercial Real Estate acquisition. These questions delve into the critical details that can impact your business's growth and financial strategy.

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Page 1 of 5

For an existing commercial property, what is the minimum owner-occupancy percentage required for an SBA 7(a) real estate loan, and does this specific scenario qualify?

A manufacturing company plans to acquire a 30,000 sq ft industrial real estate facility using an SBA 7(a) Loan. The company initially needs 18,000 sq ft for its operations and intends to lease out the remaining 12,000 sq ft.

A) 60%; Yes, it qualifies. B) 51%; Yes, it qualifies. C) 75%; No, it does not qualify. D) 60%; No, it does not qualify, as they are leasing out a portion.

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Which of the following sets most accurately represents additional cost categories that can typically be financed within an SBA 504 Loan for a commercial real estate project?

Hint: Beyond the straightforward purchase of a commercial real estate property, an SBA 504 Loan is highly effective for comprehensive projects.

A) Business inventory, working capital, and employee salaries. B) Building renovations, long-term machinery essential to operations within the property, and soft costs like architectural fees. C) Advertising expenses, short-term equipment leases, and utility deposits. D) Personal real estate investments, vehicles for personal use, and stock market investments.

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Between an SBA 7(a) Loan and an SBA 504 Loan, which program generally offers the lowest typical borrower down payment for a commercial real estate acquisition, and what is that common minimum percentage for established businesses?

A highly profitable professional services firm in a competitive market wants to purchase its office real estate with minimal upfront capital. The firm's owners prioritize cash flow and liquidity.

A) SBA 7(a) Loan; 15% B) SBA 504 Loan; 10% C) SBA 7(a) Loan; 5% D) SBA 504 Loan; 20%

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For new construction, what is the initial minimum owner-occupancy percentage required, and what is the maximum timeframe to meet the full owner-occupancy threshold, for an SBA Real Estate Loan?

A fast-growing tech startup plans to construct a new 50,000 sq ft headquarters using an SBA Loan. They will immediately occupy 35,000 sq ft and have a definitive plan to occupy the remaining 15,000 sq ft within two years as their team expands.

A) Initial 51%, full 80% within 5 years. B) Initial 60%, full 80% within 3 years. C) Initial 75%, full 100% within 1 year. D) Initial 51%, full 100% within 2 years.

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What is this crucial requirement, and what fundamental principle does it underscore for the lender?

When securing an SBA Loan for a commercial real estate purchase, principal owners with a 20% or greater ownership stake are almost universally required to provide a specific type of assurance beyond the collateral of the real estate itself.

A) A fixed-rate interest payment commitment, demonstrating long-term stability. B) A first-lien position on all personal assets, ensuring full recovery. C) A personal guarantee, signifying the owners' personal commitment to loan repayment. D) A business plan with projected revenue growth of at least 15% annually, showing future viability.

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For rapid acquisitions, value-add plays, or distressed asset rehabilitation, Indiana bridge loans deliver short-term, interest-only financing. Available from both regional banks and specialty lenders, recent trends show more “light renovation” bridge activity in commercial corridors such as Fort Wayne South Anthony and Downtown Evansville.

Bridge Loan Success Story: Hammond Industrial Conversion

✅ Real Estate Investor Resources

• AirDNA (Short-Term Rental Data)
  https://www.airdna.co

• Rentometer (Rent Comps)
  https://www.rentometer.com
• Zillow Research & Data
  https://www.zillow.com/research

DSCR Loan IQ Quiz!

Test your knowledge of Debt Service Coverage Ratio (DSCR) loans!

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Page 1 of 3

What is the primary factor a lender focuses on when approving a DSCR loan for an investment property? a) The borrower's personal debt-to-income (DTI) ratio b) The property's ability to generate enough income to cover its mortgage payments c) The borrower's credit score history over the past 10 years d) The total number of investment properties the borrower already owns

Page 2 of 3

If a property has a Net Operating Income (NOI) of $5,000 per month and its total monthly debt service (PITI) is $4,000, what is its DSCR? a) 0.8x b) 1.0x c) 1.25x d) 5.0x

Page 3 of 3

Which type of borrower most commonly benefits from using a DSCR loan? a) First-time homebuyers purchasing a primary residence b) Investors with a strong W-2 income and minimal tax deductions c) Self-employed individuals or those with complex income who want to avoid traditional income verification d) Homeowners looking to refinance their primary residence for a lower interest rate

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Investor: Chicago-based developer
Loan: .3M bridge loan from PNC Bank, 9.2% interest-only, 18-month term
Use: Acquisition & repositioning of vacant 140,000 sf warehouse for last-mile logistics
Result: Sold to REIT for $3.4M after 9 months, repaid loan early, netting a $700,000 profit

Multifamily Loans: Indiana’s Apartment Boom

With statewide vacancy rates below 5% and student populations driving new absorption in cities such as Bloomington, Lafayette, and South Bend, multifamily lending is highly competitive in 2025. Options include Fannie Mae/Freddie Mac agency loans, bank portfolio loans, and private debt funds.

• Loan amounts: $1M–$20M+
• Rates: Start as low as 5.50% (fixed, 5-10 years)
• Up to 80% LTV for stabilized assets
• Interest-only and cash-out options for seasoned borrowers

Multifamily Loan Case Study: Bloomington New Build

Sponsor: Student housing firm
Project: 72-unit Class A apartments (pre-leased, adjacent IU campus)
Loan: $7.5M from First Merchants Bank, 6.05% fixed 10-year, interest-only for 18 months
Benefit: Accelerated lease-up, amortization begins after stabilization, project fully occupied within 6 months

Construction Loans for Indiana CRE Projects

Driven by urban renewal and new logistics demand, Indiana’s construction financing market is robust in 2025, particularly for pre-leased retail, medical office, and industrial spaces.

• Loan proceeds: 70%–75% LTC (Loan-to-Cost)
• Terms: 12 to 24 months, floating rates
• Interest reserves funded at close
• Transition to permanent financing post-completion

Construction Financing Example: Carmel Midtown Retail Pad

Developer: Regional retail operator
Loan: $1.2M construction line from Star Financial Bank, prime + 1.5%, 15-month term
Security: Pre-leased to national QSR chain
Outcome: Finished on budget; refinanced into .65M commercial mortgage with Old National Bank, LTV 77%

Indiana 2025 Lending Outlook

Despite fluctuations in national commercial lending, Indiana remains a stable and competitive market. Lenders are increasingly requiring detailed business plans and experienced sponsorship, but still offer flexibility for strong deals, especially in industrial, multifamily, and medical/office assets.

Frequently Asked Questions

How long does a commercial real estate loan take to close in Indiana?

Standard mortgages close in 45-60 days; bridge and construction loans may close in as little as 21-30 days with full file readiness.

What loan-to-value ratios are typical for Indiana CRE?

Permanent: 65%-80%. Construction: up to 75% of total project costs. Bridge: 60%-70% (after-repair value).

Can I get non-recourse loans?

Yes—for stabilized, cash-flowing properties, most agency and some bank portfolio loans offer non-recourse terms.

Get Started: Find the Right Indiana CRE Loan

Whether acquiring your next office building in Indianapolis or breaking ground on a Fort Wayne warehouse, Indiana’s 2025 lending environment offers flexible, locally focused borrowing options.
Connect with one of the state’s top lenders for tailored terms, local insight, and expedited approvals.

Get a No Obligation Quote Today.

GHC Funding DSCR LOAN, SBA LOAN, BRIDGE LOAN

Contact GHC Funding Today. Main: 833-572-4327 Email: sales@ghcfunding.com

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