Commercial Real Estate Financing That Fits Your Deal
January 13, 2026
Key Takeaways
- Nearly $1 trillion in commercial mortgages had original maturity dates in 2025, driving strong demand for refinancing and alternative financing
- Loan-to-value ratios average 60-70% in current conditions, requiring more equity than pre-2022 deals
- Private credit funds provide flexible terms when traditional banks remain selective about property types
- Bottom Line: Matching your financing structure to property stage and investment timeline determines whether your deal closes successfully
Nearly a trillion dollars in commercial real estate debt comes due this year. That pressure is reshaping how investors approach financing—and which lenders they turn to for capital.
Traditional banks remain selective. Office properties face scrutiny. Meanwhile, multifamily, industrial, and specialized assets, such as medical offices, attract significant lender interest. Understanding which financing options fit your property type and deal timeline matters more now than it has in years.
Why Your Financing Choice Matters Now
The commercial real estate financing market in 2026 reflects a mix of opportunities and constraints. Interest rates have stabilized after recent volatility, but they remain elevated compared to 2021 levels. Loan-to-value ratios are typically 60-70% for most deals, meaning investors need to bring more equity to the table or explore creative financing structures.
Lender appetite varies dramatically by property type. Stabilized multifamily assets with strong occupancy rates command competitive terms. Industrial and logistics properties benefit from sustained demand. Office properties, particularly older Class B and C buildings, face tighter lending standards and lower leverage.
Speed versus terms becomes a critical trade-off. Traditional bank loans offer lower rates but require extensive documentation and longer approval timelines—often 60 to 90 days. Private credit can close in weeks but comes with higher rates. The right choice depends on your specific situation: acquisition deadlines, property condition, and how quickly you can stabilize cash flow.
Deal structure matters too. If you’re acquiring a property that needs immediate repositioning work, a bridge loan gives you time to improve occupancy before refinancing into permanent debt. If you’re buying a stabilized asset with ten years of lease history, a traditional bank loan or CMBS financing makes more sense.
Matching Financing to Your Property Stage
Stabilized Properties
Income-producing properties with consistent cash flow and strong occupancy qualify for traditional bank financing. These loans offer terms of five to 20 years, often with amortization periods that extend beyond the loan term, resulting in a balloon payment at maturity. Rates are competitive, but lenders require debt service coverage ratios of at least 1.20x—meaning your property’s net operating income must exceed annual debt service by 20% or more.
CMBS loans work for borrowers seeking higher leverage on well-performing assets. These loans are typically non-recourse, limiting personal liability to the property itself. They offer fixed rates and terms up to ten years, but come with prepayment penalties that make early payoff expensive. CMBS works best when you plan to hold the asset through the full loan term.
Transitional Assets
Properties requiring improvements, lease-up work, or repositioning need short-term capital. Bridge loans provide 12 to 36-month terms, giving you time to stabilize the asset before refinancing into permanent debt. These loans are primarily asset-based, meaning lenders focus on property value and potential rather than borrower credit scores.
Private credit fills gaps left by traditional lenders. Non-bank lenders provide flexible terms for properties that don’t fit conventional underwriting boxes—maybe the occupancy is too low, the property needs significant work, or the borrower’s financial profile doesn’t meet bank standards. Rates are higher, but deals close quickly, sometimes within days.
Development and Owner-Occupied
Construction loans fund ground-up development through draw schedules tied to project milestones. In 2025, construction lenders required detailed budgets, timelines, and often pre-leasing commitments to demonstrate market demand. These loans convert to permanent financing once the property stabilizes.
SBA 7(a) and 504 loans serve small businesses purchasing property for their own operations. These programs offer competitive rates, low down payments (often 10%), and amortization up to 25 years. However, they’re not available for passive investment properties—the business must occupy at least 51% of the space.
What Lenders Actually Evaluate
Debt service coverage ratio remains the primary underwriting metric. Most lenders require 1.20x DSCR minimum, though requirements vary by property type and market conditions. Your property must generate enough net operating income to comfortably cover debt payments with room for vacancy or unexpected expenses.
Property cash flow often matters more than borrower financials, especially for non-recourse loans. Lenders analyze rent rolls, lease terms, tenant quality, and operating expense history. They want to see consistent performance, not projections based on hoped-for improvements.
Clarity about the exit strategy is essential for short-term financing. Bridge lenders and private credit funds need to understand how you’ll repay the loan—through refinancing, sale, or property stabilization. Vague plans raise red flags and limit financing options.
Match Financing to Your Timeline
The best commercial real estate financing option depends on where your property sits today and where you need it to be. Stabilized assets with proven cash flow deserve long-term, low-rate financing. Transitional properties need flexible, short-term capital to give you room to execute your business plan.
Choosing poorly costs money—either through rates that are too high for a stable property or terms that are too rigid for a repositioning deal. The market offers options for nearly every scenario. The key is understanding which structure fits your specific deal.
Wiss provides transaction advisory services for commercial real estate investors, including financing strategy and deal structuring. Contact us to discuss your financing needs.
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