Commercial Real Estate Loan Rates

What Are the Current Average Commercial Loan Rates?

Currently commercial loan rates can average between 2.710% and 12.000%+, depending on the loan product. Keep in mind that all commercial loan quotes depend on several underwriting factors including the property and borrower location, loan-to-value (LTV), debt service coverage ratio (DSCR), property usage (investment or owner-occupied), property type, and the borrower’s financial strength. The interest rates below should be considered indicative for properties in primary markets with good LTVs and DSCRs, as well as a strong and experienced sponsor. However, because we offer so many loan programs, actual interest rates may be higher or lower than what is listed below.

Other Rates

• Apartment Loan Rates
• Current Index Rates

What are the Different Types of Commercial Loans?

There are many types of commercial loans available in the United States, and the type of loan that a borrower should consider depends on several factors including investment strategy, loan features, other properties in your portfolio, credit availability for future needs, any pertinent tax considerations, and future economic conditions. The main types of commercial loans that investors use are the following:

Conventional

Conventional mortgages are loans offered by FDIC-insured institutions such as banks or credit unions. They typically require a personal guarantee and an underwriting of the global cash flow of the guarantors, including personal and business tax returns. This loan product can be used for investment or owner-occupied properties.

Conventional Commercial Loan Rates
Term	Fixed Rate	Floating Rate	Max LTV*	Max Amortization**
3 Years	3.250% - 4.100%	2.710% - 3.710%	85% - Owner-Occupied / 75% - Investment	30 Years
5 Years	3.270% - 4.120%	2.710% - 3.710%	85% - Owner-Occupied / 75% - Investment	30 Years
7 Years	3.380% - 4.230%	2.710% - 4.210%	85% - Owner-Occupied / 75% - Investment	30 Years
10 Years	3.450% - 4.300%	2.710% - 4.710%	85% - Owner-Occupied / 75% - Investment	30 Years
15 Years	3.800% - 4.800%	2.710% - 4.710%	85% - Owner-Occupied / 75% - Investment	15 Years

Loan Amount $1,000,000+
* Not available for all properties in all markets
** Priced on a per-transaction basis

CMBS

A CMBS/Conduit mortgage is a non-recourse loan provided by a financial institution that securitizes the loans after closing by pooling the loans together and offering bonds collateralized by the underlying real estate. Used only for investment properties.

CMBS Loan Rates
Term	Fixed Rate	Floating Rate	Max LTV*	Max Amortization
5 Years	3.210% - 4.660%	N/A	75% - Investment	30 Years
7 Years	3.200% - 4.700%	N/A	75% - Investment	30 Years
10 Years	3.240% - 4.790%	N/A	75% - Investment	30 Years

Loan Amount $2,000,000+
* Not available for all properties in all markets

SBA 504

SBA 504 is a loan product guaranteed by the Small Business Administration for the financing of owner-occupied real estate and/or machinery and equipment. LTVs go up to 90% and may be used for construction or existing properties.

SBA 504 Loan Rates
Term	Fixed Rate - Purchase**	Fixed Rate - Refinance**	Max LTV*	Max Amortization
10 Years	3.550%	3.590%	90% - Owner-Occupied	10 Years
20 Years	3.580%	3.580%	90% - Owner-Occupied	20 Years
25 Years	3.640%	3.640%	90% - Owner-Occupied	25 Years

Loan Amount $750,000+
* Not available for all property types
** SBA debenture rate only

SBA 7a

SBA 7a is another loan product guaranteed by the Small Business Administration, but may be used for the financing of owner-occupied, real estate, machinery, equipment, inventory, FF&E, or working capital. LTVs go up to 80% and may be used for construction or existing properties.

SBA 7a Loan Rates
Term	Fixed Rate - Purchase*	Floating Rate - Purchase	Max LTV*	Max Amortization
10 Years	4.000% - 7.000%	N/A	85% - Owner-Occupied	25 Years
20 Years	4.500% - 7.000%	6.500% - 7.500%	85% - Owner-Occupied	20 Years

Loan Amount $750,000+
* Not available for all property types

USDA

A USDA loan may be used for the acquisition or construction of commercial real estate, purchase of machinery or equipment, or establishment of working capital. It is only available in eligible rural areas with populations of 50,000 or less.

USDA Loan Rates
Term	Floating Rate	Fixed Rate**	Max LTV*	Max Amortization*
5 Years	5.000% - 8.000%	PTB	80% - Owner-Occupied or Investment	30 Years
7 Years	5.000% - 8.000%	PTB	80% - Owner-Occupied or Investment	30 Years
10 Years	5.000% - 8.000%	PTB	80% - Owner-Occupied or Investment	30 Years
30 Years	PTB	PTB	80% - Owner-Occupied or Investment	30 Years

Loan Amount $1,000,000-$25,000,000
* Not available for all property types
** Priced on per-transaction basis

Insurance

(Life Company/LifeCo): Typically the most conservative and competitive of all the products, most insurance lenders prefer newer, high-quality properties at low leverage in major markets and very experienced investors. This product can be used for stabilized properties (or construction in some circumstances).

Insurance Loan Rates
Term	Fixed Rate*	Floating Rate	Max LTV*	Max Amortization*
5 Years	3.060% - 3.660%	N/A	70% - Investment	30 Years
7 Years	3.100% - 3.950%	N/A	70% - Investment	30 Years
10 Years	3.190% - 4.290%	N/A	70% - Investment	30 Years
20-30 Years	3.440% - 4.790%	N/A	70% - Investment	30 Years

* Not available for all property types

Bridge

Bridge loans are used for the light renovation and/or re-stabilization of an investment property. These are typically higher interest rate loans and are used short-term (6-36 months) until the property is fully renovated and re-stabilized. After the property is fully stabilized, the borrower can seek one of the other lower-interest rate loan products mentioned in this section.

Bridge Loan Rates
Term	Floating Rate	Fixed Rate	Max LTV*	Max Amortization**
6 Months	5.710% - 11.710%	N/A	80% - Investment	I/O
12 Months	5.710% - 11.710%	N/A	80% - Investment	I/O
24 Months	5.710% - 11.710%	N/A	80% - Investment	I/O
36 Months	5.710% - 11.710%	N/A	80% - Investment	I/O

Loan Amount: $1,000,000+
* Not available for all property types or areas; may calculate using LTC instead of LTV
** Interest-Only

Construction

Construction loans are used for the substantial rehabilitation, redevelopment, or ground-up construction of a property. Interest rates can range substantially depending on the lender, property type, market, and loan product.

Constuction Loan Rates
Term	Floating Rate	Fixed Rate*	Max LTV*	Max Amortization**
6 Months	5.710% - 9.710%	N/A	75% - Owner-Occupied or Investment	I/O
12 Months	5.710% - 9.710%	N/A	75% - Owner-Occupied or Investment	I/O
24 Months	5.710% - 9.710%	N/A	75% - Owner-Occupied or Investment	I/O
36 Months	5.710% - 9.710%	N/A	75% - Owner-Occupied or Investment	I/O

Loan Amount: $3,000,000+
* Not available for all property types or areas; may calculate using LTC instead of LTV
** Interest-Only

Mezzanine (“mezz debt”)

This is a hybrid security of debt and equity that is put onto a property in a second-lien position (behind another “senior secured” lender) when the borrower cannot get a LTV that is high enough to finance a specific piece of commercial real estate. It can be used for both either the acquisition or refinance of an investment property.

Mezzanine Loan Rates
Term	Fixed Rate	Floating Rate	Max LTV*	Max Amortization
5 Years	6.660% - 8.660%	N/A	75% - Investment	30 Years
7 Years	6.700% - 8.700%	N/A	75% - Investment	30 Years
10 Years	6.790% - 8.790%	N/A	75% - Investment	30 Years

Loan Amount: $1,000,000+
* Not available for all property types or areas
** Usually used in conjinction with CMBS loans, following the same underwriting standards

Hard Money

Hard Money Loans are offered by private investment institutions for the financing of properties that are not “bankable” due to borrower credit issues, property issues, or other reasons. Because of the extremely high interest rates (typically 12%+), we don’t recommend using this product unless the Borrower has significant experience with this type of loan and can refinance out or sell the property within a short, set time frame.

Fannie Mae

Fannie Mae is a non-recourse multifamily loan product offered for experienced investors with properties in primary or secondary markets; tertiary markets only considered on an exception basis and requires a waiver. Click here for apartment loan rates.

Freddie Mac

Freddie Mac is another non-recourse multifamily loan product offered to experienced investors with properties in major markets. The main difference between this product and Fannie is the available structures for its small balance loan program (i.e. hybrid, step-down prepayment penalties). Click here for apartment loan rates.

FHA (HUD)

FHA is a non-recourse mortgage product that is federally guaranteed by the Federal Housing Authority’s Department of Housing and Urban Development (HUD). It can be used for multifamily properties or various medical facilities such as assisted living or hospitals.. Click here for apartment loan rates.

What Types of Properties Qualify for a Commercial Loan?

In order to qualify for a commercial loan, a property must be zoned appropriately for either business/commercial or multifamily use. This would include the following types of buildings:

• Office
• Retail
• Apartments (5+ units)
• Industrial/Warehouse
• Mixed Use (a combination of any of the above properties)
• Self Storage
• Hospitality (Hotel/Motel)
• Specialty Use (including car washes, churches, auto repair, hospitals, or any other property that can only be used for a specific type of business or function).

What is the Difference Between Residential and Commercial Interest Rates?

Residential properties (i.e. single-family dwellings with 4 units or less) usually have much lower interest rates available than commercial properties. Additionally, the term and amortization typically match on a residential loan (i.e. 30/30), whereas the term of a commercial loan is usually shorter than the amortization (i.e. 7/25), causing the borrower to have to refinance or payoff the loan (or sell the property) at or before the end of the loan term.

How Are Interest Rates Calculated?

Commercial interest rates may be calculated a variety of ways depending on the lender’s internal cost of funds. However, the most common way a lender calculates an interest rate is by taking a an index (i.e. LIBOR, treasury, swaps, FHLB, etc.) and adding a “spread” to that index, which is what the lender is making off of the loan. For instance, if the lender is pricing at LIBOR (currently at 1.710 + 2.00%), your interest rate would be 3.71%.

Key Market Index Rates