Commercial Real Estate Loans (2026): Types, Rates & Sizing Guide
Master commercial real estate loans in 2026. Compare bank, CMBS, agency, and bridge financing structures, underwriting metrics, and sizing limits.
Commercial real estate (CRE) loans are evaluated across property income, sponsor net worth, and three primary underwriting constraints: Debt Yield (NOI ÷ Loan), DSCR (NOI ÷ Annual Debt Service), and LTV (Loan ÷ Property Value). The binding constraint sets the maximum approved borrowing ceiling.
CRE debt structures: underwriting comparison
| Loan Structure | Max LTV Ceiling | Typical Min Debt Yield | Standard Min DSCR | Recourse Profile | Prepayment Structure |
|---|---|---|---|---|---|
| Balance Sheet Bank | 65% – 75% | 9.00% – 10.50% | 1.25x – 1.35x | Full or Partial Recourse | Step-down (3-2-1) or flexible |
| CMBS (Conduit) | 65% – 75% | 9.75% – 10.75% | 1.25x – 1.35x | Non-Recourse (Standard Carveouts) | Defeasance or Yield Maintenance |
| Life Insurance Co. | 55% – 65% | 8.00% – 9.25% | 1.30x – 1.45x | Non-Recourse | Yield Maintenance |
| Agency (Fannie / Freddie) | 75% – 80% | 7.50% – 8.50% | 1.20x – 1.25x | Non-Recourse (Standard Carveouts) | Yield Maintenance or Declining |
Match the financing to the property and business plan
| Financing context | What to investigate |
|---|---|
| Bank or credit union | Credit policy, recourse, covenants, maturity and prepayment terms |
| CMBS / conduit | Origination requirements, servicing process, transfer restrictions and prepayment provisions |
| Agency multifamily | Exact Fannie Mae or Freddie Mac product, eligible property, income treatment, DSCR and LTV |
| Life insurance company | Property eligibility, leverage, payment terms and portfolio requirements |
| Bridge or transitional loan | Initial funding, future advances, interest reserve, extension conditions and refinance assumptions |
| Construction loan | Draw conditions, budget contingency, completion support and permanent financing plan |
| Owner-occupied business financing | Business cash flow, occupancy requirements and applicable program eligibility |
These are categories to investigate, not a ranking of rates or a promise that every lender offers the same terms. Read the agency comparison, CMBS versus bank comparison and bridge guide for the specific questions behind each route.
Reconcile income before calculating proceeds
Start with supported rent and operating expenses. Distinguish current collections, projected income and the lender's accepted income basis. A post-reserve NCF amount should not silently replace operating NOI in a comparison. The NOI reconciliation guide and downloadable worksheet keep these differences visible.
Property income is not the only consideration. Business cash flow, sponsor resources, guarantees, collateral and loan structure can matter. The OCC CRE lending handbook discusses cash-flow analysis and guarantor assessment; it does not establish one universal credit-score or down-payment requirement.
Compare the three modeled limits
- LTV: value multiplied by the assumed maximum leverage. A hypothetical $10 million value at a 70% cap supports $7 million under this test.
- Debt yield: accepted annual income divided by the quoted target. To see the exact formula and worked lender adjustments, follow our step-by-step guide on how to calculate debt yield. Note that minimum hurdle rates differ by asset sector; compare benchmarks in debt yield by property type.
- DSCR: accepted income divided by the minimum coverage ratio and annual loan constant.
Interactive CRE loan sizing sandbox
Test how the three simultaneous constraints size your loan proceeds in real time:
Run the CRE loan-sizing calculator and walk through our comprehensive worked CRE loan sizing example to identify which test binds. Fees, reserves, holdbacks and other credit conditions can reduce cash available at closing.
Compare quotes on a common basis
Record the funding date, balance, income definition, interest rate, amortization, maturity, IO period, fees, guarantees, prepayment costs and future-advance conditions for each quote. A larger commitment may have less initial funding. A smaller monthly payment may leave a larger maturity balance. A favorable rate may come with exit restrictions that do not fit the intended holding period.
Use the underwriting checklist to document the inputs. Evaluate refinance risk and prepayment structure before treating the quote as comparable.
Frequently asked questions
What credit score is required? There is no single score established by this guide. Ask the lender or named program for its current borrower and guarantor criteria.
How much equity is needed? Subtract usable loan proceeds from the complete sources-and-uses budget. Include acquisition costs, reserves and any unfunded work. Purchase price minus a headline loan amount may understate the cash requirement.
Does passing all three sizing tests mean approval? No. Sizing is one part of a decision that also depends on property, borrower, documentation and other conditions.
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