Commercial real estate LTV ratios determine how much financing a lender will extend relative to a property's appraised value. In 2026, LTV benchmarks range from 55% for Class B/C office to 80% for agency multifamily, with most stabilized assets falling between 65% and 75%. Understanding these benchmarks is essential for structuring your capital stack, selecting the right lender, and maximizing leverage on your next acquisition or refinance.
This guide breaks down the latest commercial real estate LTV ratios by asset class, lender type, and loan purpose so you can benchmark your deal against current market standards.
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What Does LTV Mean in Commercial Real Estate Financing?
Loan-to-value (LTV) is the ratio of a mortgage loan to the appraised value (or purchase price) of a commercial property. If a property is valued at $5 million and a lender offers a $3.5 million loan, the LTV is 70%. This is one of the most fundamental metrics in commercial real estate underwriting because it directly quantifies the lender's risk exposure.
Higher LTV means the borrower puts in less equity, but the lender takes on more risk. Lower LTV provides a larger equity cushion, which protects the lender if property values decline. For borrowers, the goal is to secure the highest LTV possible without triggering unfavorable terms like higher rates or additional recourse guarantees.
In 2026, LTV is rarely the sole constraint on loan proceeds. Lenders also evaluate DSCR (debt service coverage ratio), debt yield, and borrower strength. A property might qualify for 75% LTV on paper, but if the debt service coverage only supports 65% leverage, the borrower receives the lower amount.
LTV is calculated differently depending on the transaction type. For acquisitions, most lenders use the lower of purchase price or appraised value. For refinances, they use the current appraised value. For construction loans, lenders reference loan-to-cost (LTC) and may also underwrite to an "as-completed" LTV.
What Are the 2026 LTV Benchmarks by Asset Class?
Commercial real estate LTV ratios vary significantly by property type. Lenders assign different risk profiles to each asset class based on historical performance, income stability, and market liquidity. Here is a comprehensive breakdown of where LTV benchmarks stand in 2026.
Multifamily remains the most favored asset class, with agency lenders (Fannie Mae and Freddie Mac) offering up to 80% LTV for stabilized properties in strong markets. Bank and CMBS lenders typically cap multifamily LTV at 65-75%, while life companies stay more conservative at 60-70%. The multifamily sector benefits from consistent demand, government-sponsored liquidity, and a deep pool of competitive lenders. For a deeper analysis of multifamily leverage, see our guide on multifamily LTV ratios for 2025-2026.
Industrial properties have become the second-most-favored asset class following the sustained e-commerce and logistics boom. LTV ratios for well-located industrial assets range from 65-75% depending on lender type. Strong tenant credit, long lease terms, and triple-net structures contribute to favorable underwriting. CMBS lenders typically offer 65-70%, while banks may reach 75%.
Retail LTV varies dramatically based on quality and anchoring. Grocery-anchored centers can achieve 65-70% from CMBS and up to 70% from banks. Unanchored strip centers face tighter underwriting, often capped at 55-65%. Lenders scrutinize tenant mix, lease rollover schedules, and e-commerce exposure.
Office remains the most challenged asset class heading into 2026. Remote and hybrid work have permanently reduced demand in many submarkets. Class A office can still achieve 55-65% LTV from CMBS and banks, but Class B and C buildings often struggle to secure more than 50-60% leverage. Many lenders have reduced their office allocations entirely.
Self-storage has emerged as a strong performer, with LTV ratios of 65-75% available from banks, CMBS, and bridge lenders. Facilities with strong occupancy (85%+), professional management, and climate-controlled units in growing MSAs receive the best terms.
Hospitality is underwritten conservatively due to the cyclical nature of hotel operations. LTV ratios typically range from 55-65% for full-service hotels and 60-70% for limited-service or extended-stay properties. Lenders require seasoned operators and may reduce LTV during periods of travel demand uncertainty.
How Do LTV Ratios Differ by Lender Type?
The type of lender you approach has as much impact on your LTV as the property itself. Each capital source operates under different regulatory frameworks, risk appetites, and return requirements.
Agency lenders (Fannie Mae and Freddie Mac) provide the highest LTV for multifamily properties, up to 80% for stabilized assets. These loans feature fixed rates, long terms (up to 30 years), and non-recourse structures. Agency lending is exclusively available for multifamily properties with five or more units.
CMBS (commercial mortgage-backed securities) lenders offer 55-75% LTV across all major asset classes. CMBS is non-recourse, features fixed rates with terms of 5-10 years, and allows interest-only periods. CMBS is a strong option for conduit loan executions on stabilized properties.
Banks and credit unions typically provide 55-75% LTV depending on the borrower relationship, property type, and market. Bank loans often carry recourse, but relationship borrowers may negotiate partial or non-recourse structures. Banks are a strong source for mid-size transactions between $1 million and $20 million.
Life insurance companies are the most conservative lenders, with LTV caps generally at 55-70%. They focus on the highest-quality assets in the best locations. Life company loans feature the lowest interest rates in the market, ideal for borrowers who prioritize cost of capital over maximum proceeds.
Bridge lenders offer 65-80% of current value and sometimes underwrite to as-stabilized value for transitional properties. Bridge loans are designed for value-add, lease-up, or repositioning strategies where the property does not yet qualify for permanent financing.
Hard money lenders typically provide 50-70% LTV with the fastest execution times. These loans carry the highest rates and fees but can close in days. Hard money is best for time-sensitive acquisitions or properties that cannot qualify for traditional financing.
How Do DSCR and Debt Yield Interact With LTV?
LTV is one of three primary underwriting constraints that determine your final loan proceeds. Understanding how DSCR and debt yield interact with LTV is essential for accurately sizing your loan before you submit an application.
Debt service coverage ratio (DSCR) measures whether a property's net operating income (NOI) can cover annual debt payments. Most lenders require a minimum DSCR of 1.20x to 1.35x. When NOI is thin relative to the loan amount, the DSCR constraint reduces your effective LTV below the lender's stated maximum.
For example, if a property is valued at $10 million and the lender offers 75% LTV, the maximum loan would be $7.5 million. But if the NOI only supports a 1.25x DSCR at $6.5 million, the borrower receives $6.5 million (effectively 65% LTV). Run your numbers through a DSCR calculator before approaching lenders.
Debt yield is calculated as NOI divided by the total loan amount. It serves as a hard floor on loan proceeds, independent of interest rates. Most CMBS lenders require a minimum debt yield of 8-10%, and some have raised floors to 10-12% for higher-risk asset classes. Even if a deal passes the LTV and DSCR tests, a low debt yield can cap proceeds further.
The practical takeaway: your loan proceeds will be the lowest amount produced by the LTV, DSCR, and debt yield calculations. Sophisticated borrowers run all three tests simultaneously.
Use our commercial mortgage calculator to model how these metrics interact for your specific deal.
What Factors Increase or Decrease Your LTV in 2026?
Your actual LTV is not fixed by asset class alone. Multiple property-level, borrower-level, and market-level factors push your leverage higher or lower.
Strong net operating income is the single most important factor. Lenders underwrite to in-place income, and a property with robust, stable cash flow will qualify for the highest LTV within its asset class. Increasing rents, reducing vacancy, and controlling expenses before applying for financing can directly improve your leverage.
Borrower experience and financial strength also matter. Lenders evaluate your track record with similar properties, your net worth (typically at least 1x the loan amount), and your liquidity (usually 10-15% of the loan post-closing). Sponsors with strong resumes receive higher LTV and better terms.
Location and market fundamentals affect LTV because they influence lender confidence in the property's long-term value. Primary markets with strong population growth and limited new supply generally achieve 3-5% higher LTV than secondary or tertiary markets.
Property condition directly impacts the appraisal, which is the denominator in the LTV calculation. Deferred maintenance reduces appraised value and signals risk. Completing capital improvements before refinancing can boost both your appraisal and loan proceeds.
How Have CRE LTV Ratios Changed From 2024 to 2026?
The period from 2024 to 2026 has seen a gradual loosening of LTV standards following the sharp tightening that occurred in 2022 and 2023 when interest rates rose rapidly. Understanding this trajectory helps borrowers time their financing decisions.
In 2024, lenders were cautious. The Federal Reserve held rates at elevated levels, and transaction volume was down significantly. Average LTV for stabilized multifamily agency loans hovered around 72%, and CMBS lenders were tightening debt yield floors across all asset classes.
By 2025, conditions began to improve. The Fed initiated a rate-cutting cycle, and capital markets responded with increased lender competition. Agency multifamily LTV crept up to 75% on average, and CMBS lenders relaxed some of their more restrictive underwriting overlays.
Entering 2026, the trend toward higher leverage has continued. Agency multifamily LTV is now averaging 78% with maximums reaching 80% for top-tier properties. CMBS and bank lending has normalized across most asset classes, with LTV ratios returning to levels closer to the pre-2022 environment. The exception remains office, where structural demand concerns keep LTV suppressed.
This recovery has been uneven. Properties with strong fundamentals in growing markets have benefited most, while assets with operational challenges or high vacancy continue to face tighter underwriting.
How Can You Maximize Your LTV on a Commercial Property?
Maximizing your commercial real estate LTV ratios requires a strategic approach that addresses every dimension lenders evaluate.
The first priority is stabilizing your property's income. Achieving 90%+ occupancy and demonstrating 6 to 12 months of stable operating history gives lenders confidence in the sustainability of your NOI.
Improving your DSCR above 1.30x is critical because this metric frequently becomes the binding constraint on loan proceeds. Even a small improvement in DSCR can unlock significantly more leverage.
Targeting the right lender type is essential. Agency lenders maximize LTV for multifamily. CMBS provides the strongest non-recourse execution for stabilized assets. Bridge lenders offer the most leverage for transitional properties. Mismatching your deal with the wrong lender type can cost you 5-10% in leverage.
Prepare a comprehensive borrower package highlighting your experience, net worth, and liquidity. Lenders make exceptions for strong sponsors, and a well-organized presentation can mean the difference between 70% and 75% LTV.
Consider supplemental capital structures. Mezzanine debt, preferred equity, or subordinate financing can push your total capitalization to 80-90% while keeping the senior mortgage within conventional LTV guidelines.
Finally, time your application to coincide with favorable market conditions. When lender competition is high and spreads are tight, underwriting standards relax.
What Are LTV Requirements for Different Loan Purposes?
LTV benchmarks shift depending on whether you are acquiring a property, refinancing an existing loan, or funding a construction project. Each transaction type carries different risk characteristics that influence the leverage a lender will provide.
Acquisition loans are underwritten to the lower of purchase price or appraised value. For stabilized acquisitions, LTV ranges from 65-80% depending on asset class and lender type. Lenders give credit for borrower experience and may stretch LTV for repeat clients with strong track records. The key to maximizing acquisition LTV is presenting a clean property with stable income, creditworthy tenants, and limited capital needs.
Rate-and-term refinances often achieve the same or slightly higher LTV than acquisition loans because the borrower has an operating track record at the property. If you have owned the asset for several years and can demonstrate consistent NOI growth, lenders may offer 70-80% of the current appraised value. Permanent loan programs from agency lenders, CMBS, and life companies are the most common refinance execution.
Cash-out refinances carry a leverage penalty of 5-10% compared to rate-and-term transactions. Lenders view the extraction of equity as increasing risk because the borrower has less skin in the game after closing. Maximum cash-out LTV typically ranges from 65-75% across most lender types and asset classes.
Construction loans are underwritten to loan-to-cost (LTC) rather than LTV, with typical LTC ratios of 60-75%. Some lenders also calculate an "as-completed" LTV, which is the loan amount divided by the projected value upon completion, generally capping at 65-70%. Sponsors should expect to contribute 25-40% equity for ground-up projects. For eligible cost details, see our guide on Fannie Mae multifamily eligible soft costs.
Value-add bridge loans occupy a middle ground between acquisition and construction financing. Bridge lenders may underwrite to 70-80% of current value or 65-75% of the future stabilized value, whichever produces a lower loan amount. The borrower executes their business plan before refinancing into permanent financing at a higher stabilized value.
What Role Do Interest Rates and Recourse Play in 2026 LTV?
Interest rates and LTV are inversely correlated in practice, even when lenders maintain the same nominal LTV cap. Higher rates increase debt service payments, which compresses DSCR and effectively reduces the loan amount a property can support. In early 2026, the 10-year Treasury has stabilized below its 2023-2024 peaks following the Fed's rate cuts in 2025. This has allowed lenders to expand LTV modestly while maintaining prudent debt service coverage standards.
The practical implication is that borrowers in 2026 can access higher LTV than in 2023 or 2024, because lower rates allow the same NOI to support more debt while maintaining adequate DSCR. A 50 basis point increase in rates can reduce your effective LTV by 3-5% through the DSCR constraint alone, even if the lender's stated LTV cap remains unchanged.
Recourse is another key trade-off. Non-recourse financing is available through agency, CMBS, and life company lenders, but non-recourse loans typically cap LTV at lower levels than recourse alternatives. CMBS may offer 65-70% non-recourse, while a bank might provide 75% with full recourse. For borrowers who need higher leverage but want to limit personal exposure, layering non-recourse senior debt with mezzanine financing or preferred equity can achieve 80-85% total leverage while keeping the senior mortgage non-recourse at 65-70% LTV.
If you are evaluating your leverage options and want to understand the trade-offs between LTV, recourse, and rate, contact our team for a confidential deal review.
How Do You Apply These LTV Benchmarks to Your Next Deal?
Start by identifying which asset class and condition category your property falls into. A stabilized, Class A multifamily property in a top-25 MSA will command the highest LTV (up to 80% agency). A value-add office building in a secondary market may struggle to find leverage above 55-60%.
Next, determine which lender type is the best fit. Match your loan size, property type, and business plan to the capital source that specializes in that profile. Then, run the three-test analysis: calculate your LTV, DSCR, and debt yield at several loan amounts. The lowest result across all three tests is your realistic loan proceeds. Use our commercial mortgage calculator to model these scenarios quickly.
Ready to find out what LTV your property qualifies for? Contact Clearhouse Lending for a free quote. Our team will run the numbers, identify the best lender match, and help you structure for maximum leverage.
Frequently Asked Questions
What is a good LTV ratio for a commercial real estate loan?
A good LTV ratio for commercial real estate depends on the asset class and your financing goals. For stabilized multifamily, 75-80% is considered strong leverage. For commercial properties like industrial, retail, and self-storage, 65-75% is typical. Office properties currently command 55-65% due to market headwinds. The "best" LTV balances maximum leverage with favorable terms, including rate, recourse structure, and prepayment flexibility.
Why is my actual loan amount lower than the advertised LTV?
Lenders use three simultaneous tests to determine proceeds: LTV, DSCR, and debt yield. Your loan amount is the lowest result produced by these three calculations. If a lender advertises 75% LTV but your property's NOI only supports a 1.25x DSCR at a lower loan amount, the DSCR test becomes the binding constraint. This is especially common in higher interest rate environments where debt service costs consume more of the NOI.
How does LTV differ for construction loans versus permanent loans?
Construction loans are typically underwritten to loan-to-cost (LTC) rather than LTV. LTC ratios range from 60-75%, meaning the lender finances a portion of total project costs (land, hard costs, and soft costs). Some lenders also evaluate the "as-completed" LTV, which compares the loan to the projected stabilized value. Permanent loans use LTV based on the current appraised value and stable operating income, which generally allows higher leverage for seasoned properties.
Can I get above 80% LTV on a commercial property?
Yes, but with limited options. SBA 504 loans offer up to 90% LTV for owner-occupants. Outside of SBA programs, achieving above 80% leverage typically requires a capital stack with multiple layers, such as a 70% senior loan combined with 10-15% mezzanine debt or preferred equity. Bridge lenders occasionally underwrite to 80%+ of current value for strong transitional deals, though these carry higher interest rates and shorter terms.
How often do commercial LTV benchmarks change?
Commercial LTV benchmarks shift gradually with market conditions, typically adjusting by 3-7% over 12 to 24 month cycles. The most significant drivers are interest rate movements, property market fundamentals, and lender capital availability. After the rapid tightening of 2022-2023, benchmarks have been slowly expanding through 2025 and into 2026. Borrowers should check current benchmarks quarterly and work with a broker who has real-time visibility into lender appetite across capital sources.
Ready to benchmark your deal against current LTV standards? Get a free quote from Clearhouse Lending and let our team identify the highest-leverage option for your commercial property.