Things to Keep In Mind When Applying for a Church Loan

Churches, temples, convents, and other religious-related entities often need cash for expansion, repair, construction, or any other big purchases. Since most of them are nonprofit organizations, they don’t have a stable source of income for such ventures. Fortunately, there are specialty lenders that now offer church loans. 

In this article, we will discuss what a church loan is and the things you need to keep in mind if you apply for one so that you can pay it off on time and avoid additional fees.

Let’s get to it! 

What Is a Church Loan?

First, let’s define what a church loan is. A church loan is a mortgage loan for religious properties. This type of loan adheres to conventional commercial terms since these properties are a specific type of commercial real estate. 

You can apply for a church loan if you need to purchase the land and structure, refinance the church when a term loan is due, expand or repair the property, or acquire raw land and fund its development into a church. 

What Are the Things You Can Do to Pay Off the Loan and Avoid High Fees? 

One of the challenges of religious-related properties is that traditional lenders don’t offer loans to them, and many private lenders don’t accept church properties as collateral. This is why you must show your lender that you’ll be able to pay the loan on time. 

You can do this by keeping these things in mind when applying for a church loan. These tips can also help you avoid high costs when it’s time to pay off your loan. 

1. Be Careful with Offers with Low-Interest Rates

As a church loan borrower, you have to be careful because low interest rates may be a higher risk. Since some lenders are skeptical about granting loans to churches, they often shorten the loan term to reduce their risk. This technique allows them to ensure that the amount loaned will be returned in full plus the interest rate within a brief time frame. 

You have to remember that low interest rates could mean a shorter loan term. And with a shorter loan term, you may end up with a choice of paying the balance off at the end of the term, refinance with a new loan agreement, or face loan default. If one of these is your case, you may have a hard time paying for the loan, or you may end up with high penalty fees. 

2. Don’t Be Deceived with ”Fixed Rates”

Fixed rates are very similar to low interest rates. Some lenders use this term to ease the mind of borrowers that apply for loans. It simply means that the loan has a relatively short payment period. Unless you can pay the entire balance of the loan within that short term, you will receive a new “fixed” rate for the term of your next loan. 


As a church, it can be difficult to secure funding for whatever your organization needs. So, it’s crucial not to make the payment process harder for you. Before you apply for a church loan, make sure that you can pay it off within the mandated period and at little to no extra cost. Make sure to keep these things in mind so that you can pay the loan on time and avoid shelling out for costly charges. 

If you’re looking for church financing in Los Angeles, you’ve come to the right place. Century City Mortgage is a lender specializing in customized financing solutions. We provide private money financing for churches of all sizes and denominations. Get in touch with us today to learn how we can help you!