Commercial mortgage rates directly impact your investment returns, cash flow projections, and overall deal viability. Whether you are acquiring your first commercial property or refinancing an existing portfolio, understanding today's rate environment is essential for making informed financing decisions.
In January 2026, commercial mortgage rates range from approximately 5.13% to 12.75%, depending on property type, loan structure, and borrower qualifications. This guide breaks down everything you need to know about current rates, what factors influence them, and how to position yourself for the best possible terms.
Commercial Mortgage Rates at a Glance - January 2026
5.18%
Starting Rate
3.50-3.75%
Fed Funds Rate
4.26%
10-Year Treasury
$1.8T
Loans Maturing 2026
What Are Commercial Mortgage Rates Right Now in 2026?
As of January 30, 2026, commercial mortgage rates start as low as 5.18% for the most qualified borrowers and strongest properties. However, most conventional commercial loans fall within the 5.13% to 8.75% range, with the specific rate depending on multiple factors including property type, location, borrower creditworthiness, and loan-to-value ratio.
The Federal Reserve kept the federal funds rate unchanged at 3.50% to 3.75% on January 28, 2026. This marked the first pause following three consecutive rate cuts in late 2025, signaling a stabilizing rate environment after years of volatility.
Here is what you can expect across different loan types:
- Conventional Commercial Mortgages: 5.13% to 8.75%
- SBA 504 Loans (25-year fixed): 5.85%
- SBA 504 Loans (20-year fixed): 5.91%
- Bridge Loans: Starting around 5.99%
- Hard Money Loans: Starting around 7.59%
- CMBS Loans: 5.50% to 7.50%
The 10-year Treasury yield currently sits at approximately 4.26%, which serves as the primary benchmark for long-term commercial mortgage rates. While short-term rates have stabilized following the Fed's actions, long-term rates remain elevated due to persistent Treasury yields.
Current Commercial Mortgage Rates by Loan Type
| Loan Type | Rate Range | Term Options | Max LTV |
|---|---|---|---|
| Conventional Bank | 5.13% - 8.75% | 5-25 years | 75% |
| SBA 504 (25-year) | 5.85% | 25 years | 90% |
| SBA 504 (20-year) | 5.91% | 20 years | 90% |
| Bridge Loans | 5.99%+ | 12-36 months | 80% |
| CMBS Loans | 5.50% - 7.50% | 5-10 years | 75% |
| Hard Money | 7.59%+ | 6-24 months | 70% |
Want to see how these rates affect your monthly payments? Use our commercial loan calculator to run the numbers for your specific scenario.
How Do Commercial Mortgage Rates Differ by Property Type?
Not all commercial properties receive the same rates. Lenders assess risk differently based on property type, and this directly impacts the interest rate you will pay. Understanding these differences helps you set realistic expectations and structure your financing accordingly.
Multifamily Properties
Multifamily properties consistently receive the most favorable commercial mortgage rates. Lenders view apartment buildings and residential rental properties as lower risk because housing demand remains stable regardless of economic conditions. People always need somewhere to live.
Current multifamily rates range from 5.18% to 6.50% for well-qualified borrowers. Agency loans through Fannie Mae and Freddie Mac often offer even more competitive terms, sometimes dipping below 5% for strong deals. Loan-to-value ratios can reach up to 80% on multifamily properties, providing more leverage than other commercial asset classes.
Industrial Properties
Industrial facilities have become increasingly attractive to lenders due to sustained demand from e-commerce, logistics, and supply chain reshoring. Distribution centers, warehouses, and manufacturing facilities typically see rates in the 5.50% to 7.00% range.
The industrial sector benefits from long-term lease structures and creditworthy tenants, which reduces perceived risk. Lenders are particularly favorable toward modern logistics facilities in strategic locations near major transportation corridors.
Retail Properties
Retail properties face more scrutiny from lenders, though the sector has shown renewed strength in suburban markets. Current retail rates typically range from 6.00% to 8.00%, with significant variation based on tenant quality, lease terms, and location.
Grocery-anchored shopping centers and necessity-based retail command better rates than traditional mall properties. Lenders typically limit loan-to-value ratios to 65% to 75% on retail deals, requiring more equity from borrowers.
Office Properties
Office buildings present the greatest challenge in today's lending environment. Many lenders remain hesitant to finance office properties due to ongoing uncertainty about remote work trends and tenant demand. When financing is available, borrowers should expect rates in the 6.50% to 9.00% range.
Class A trophy office buildings in major urban cores can still secure competitive financing, but Class B and C suburban office properties often struggle to find willing lenders. Investors in this sector typically need to invest more equity to qualify for loans.
Rates by Property Type
Multifamily
- Lowest rates 5.18-6.50%
- Up to 80% LTV available
- Strong agency lending
- Competitive market
- Rent control risks
Industrial
- Favorable rates 5.50-7.00%
- Strong tenant demand
- Long-term leases
- Higher prices
- Limited inventory
Retail
- Improving fundamentals
- Suburban strength
- Higher rates 6-8%
- Lower LTV 65-75%
Office
- Value opportunities
- Highest rates 6.50-9%
- Limited lender appetite
What Factors Determine Your Commercial Mortgage Rate?
Your specific commercial mortgage rate depends on a complex interplay of factors. Understanding these elements helps you identify areas where you can strengthen your application and potentially secure better terms.
Loan-to-Value Ratio
The loan-to-value (LTV) ratio measures how much you are borrowing relative to the property's appraised value. Lower LTV ratios translate to lower rates because the lender faces less risk if property values decline.
A 65% LTV loan will typically receive better pricing than an 80% LTV loan on the same property. If you can contribute more equity upfront, you may save significantly on interest costs over the loan term. Many borrowers find that the interest savings justify the higher down payment.
For a detailed breakdown of equity requirements, see our guide on commercial loan down payment requirements.
Debt Service Coverage Ratio
The debt service coverage ratio (DSCR) measures the property's net operating income relative to the annual debt service. Lenders want to see that the property generates enough income to comfortably cover mortgage payments with room to spare.
Most conventional lenders require a minimum DSCR of 1.20x to 1.25x, meaning the property must generate 20% to 25% more income than needed to cover the mortgage. Properties with higher DSCRs - 1.35x or above - often qualify for preferential rates.
Learn more about DSCR requirements in our comprehensive guide: What Is a DSCR Loan?
Borrower Credit Profile
Your personal credit score and financial history influence commercial mortgage rates, particularly for smaller loans. While commercial real estate lending focuses primarily on property cash flow, lenders still evaluate borrower creditworthiness as a secondary consideration.
Strong personal credit (720+), substantial liquidity, and relevant real estate experience all contribute to better rate offers. First-time commercial borrowers or those with credit challenges may face higher rates or additional requirements.
Property Location and Condition
Geographic location significantly impacts rates. Properties in major metropolitan areas with diverse economies typically receive better pricing than those in secondary or tertiary markets. Similarly, newer or recently renovated properties command better terms than older buildings requiring significant capital improvements.
Lenders also consider local market fundamentals including vacancy rates, rent growth trends, and supply pipeline when determining rates.
Key Factors That Determine Your Rate
| Factor | Impact on Rate | Optimal Range |
|---|---|---|
| Loan-to-Value LTV | Lower LTV = Lower Rate | 60-70% for best pricing |
| Debt Service Coverage | Higher DSCR = Lower Rate | 1.35x or higher |
| Credit Score | Strong credit helps | 720+ preferred |
| Property Type | Varies by sector | Multifamily Industrial best |
| Property Location | Major metros favored | Primary markets |
| Borrower Experience | Experience reduces risk | 3+ similar projects |
How Does the Federal Reserve Impact Commercial Mortgage Rates?
The Federal Reserve's monetary policy influences commercial mortgage rates through several mechanisms, though the relationship is not always direct or immediate.
Short-Term vs. Long-Term Rates
The Fed directly controls the federal funds rate, which primarily affects short-term borrowing costs. As of January 2026, this rate stands at 3.50% to 3.75% following three rate cuts in late 2025.
However, most commercial mortgages are priced off long-term benchmarks like the 10-year Treasury yield or SOFR (Secured Overnight Financing Rate). These longer-term rates respond to inflation expectations, economic growth forecasts, and global capital flows rather than Fed policy alone.
Current Market Dynamics
The prime rate has settled at 6.75% as of December 2025, down from peaks above 8% in 2023 and 2024. This stabilization has encouraged more borrowing and refinancing activity, with the CBRE Lending Momentum Index rising 112% year-over-year in Q3 2025 - the highest lending activity since 2018.
Despite the Fed's rate cuts, the 10-year Treasury yield remains elevated at approximately 4.26%, which has kept long-term commercial mortgage rates from declining as much as some borrowers hoped. Additional rate cuts are expected later in 2026, but timing remains data-dependent.
Fed Rate Update - January 2026
The Federal Reserve held rates steady at 3.50-3.75% on January 28, 2026, marking the first pause after three consecutive cuts in late 2025. Additional cuts may come later in 2026 depending on economic data.
What Are the Different Types of Commercial Mortgage Loans Available?
Understanding your financing options helps you select the right loan structure for your specific situation. Each loan type offers distinct advantages and trade-offs.
Conventional Bank Loans
Traditional bank loans remain a staple for commercial real estate financing. Banks and credit unions offer competitive rates, particularly on loans between $1 million and $10 million. Current conventional rates range from 5.13% to 8.75%.
Conventional loans offer flexibility in terms and structure but typically require stronger borrower qualifications and property fundamentals. Loan terms range from 5 to 25 years with amortization periods up to 30 years.
SBA Loans
The Small Business Administration offers two primary loan programs for commercial real estate:
SBA 504 Loans provide long-term, fixed-rate financing with rates currently at 5.85% for 25-year terms. These loans require owner-occupancy of at least 51% of the property and cap at $5.5 million. The 504 structure offers up to 90% financing with a fixed rate locked for the full term.
SBA 7(a) Loans offer more flexibility but typically carry variable rates. These loans work well for mixed-use properties or when you need working capital alongside real estate financing.
Learn more about SBA financing options in our detailed guide: SBA Loans for Commercial Real Estate.
Bridge Loans
Bridge loans provide short-term financing for acquisitions, renovations, or repositioning strategies. Current bridge loan rates start around 5.99% with terms typically ranging from 12 to 36 months.
Bridge financing works well when you need to close quickly, when the property does not yet qualify for permanent financing, or when you plan significant value-add improvements before refinancing into a long-term loan.
DSCR Loans
DSCR loans focus primarily on property cash flow rather than borrower income verification. These loans work well for investors who may not show high taxable income but own cash-flowing properties.
Current DSCR loan rates range from 6.00% to 8.50% depending on property type and leverage. Most DSCR lenders require a minimum coverage ratio of 1.20x to 1.25x.
How to Secure the Best Commercial Mortgage Rate
Maximize Property NOI
Increase income and reduce expenses to improve your DSCR before applying
Prepare Documentation
Gather rent rolls, financials, tax returns, and entity documents
Shop Multiple Lenders
Get quotes from banks, credit unions, and alternative lenders
Negotiate Terms
Use competing offers as leverage for better rates and reduced fees
Lock Your Rate
Consider rate lock options to protect against increases during closing
How Can You Secure the Best Commercial Mortgage Rate?
Positioning yourself for the best possible rate requires preparation across multiple fronts. Here are proven strategies to improve your rate offers.
Strengthen Your Debt Service Coverage
The most impactful way to improve your rate is increasing the property's net operating income relative to the loan amount. This might mean:
- Raising rents to market levels before applying
- Reducing operating expenses through efficiency improvements
- Paying down the loan request to improve DSCR
- Timing your application after securing new leases
Even a modest improvement in DSCR can translate to meaningful rate reductions and better terms overall.
Build Relationships with Multiple Lenders
Commercial real estate lending is relationship-driven. Lenders offer their best terms to borrowers they know and trust. If you plan to build a portfolio, start cultivating relationships with several lenders before you need financing.
Having multiple lender relationships also gives you negotiating leverage. When lenders know you are shopping competitively, they are more likely to sharpen their pencils on pricing.
Consider Rate Lock Strategies
In volatile rate environments, timing your rate lock becomes crucial. Some lenders offer extended rate lock periods for a fee, which can protect you if rates rise during the closing process.
Conversely, if you expect rates to decline, a float-down option allows you to benefit from rate improvements while protecting against increases. Discuss these strategies with your lender based on your market outlook.
Work with an Experienced Broker
Commercial mortgage brokers maintain relationships with dozens of lenders and understand which institutions are most competitive for different property types and loan sizes. A good broker can often secure rates 25 to 50 basis points lower than you might find on your own.
Brokers also handle much of the documentation and negotiation, saving you time and potentially avoiding costly mistakes in the process.
Pro Tip: Start Early on Refinancing
If you have a loan maturing in 2026, begin the refinancing process 6-12 months before maturity. This gives you time to shop lenders, make property improvements, and secure the best available terms.
Ready to explore your financing options? Contact our team for a personalized rate quote based on your specific property and situation.
What Should You Know About Loan Maturities and Refinancing in 2026?
The commercial real estate market faces a significant wave of loan maturities in 2026, creating both challenges and opportunities for borrowers.
The Maturity Wall
Approximately $1.8 trillion in commercial loans will mature in 2026, spread across roughly 7,000 properties. Many of these loans originated between 2019 and 2021 when rates were significantly lower - sometimes 200 to 300 basis points below current levels.
Borrowers facing maturity must prepare for potentially higher rates on refinancing. If your net operating income has not kept pace with rate increases, you may face a funding gap requiring additional equity or principal paydown.
Refinancing Strategies
If you have a loan maturing in 2026, start the refinancing process early - ideally 6 to 12 months before maturity. This gives you time to:
- Shop multiple lenders for the best terms
- Make property improvements that enhance value
- Address any deferred maintenance or tenant issues
- Explore rate lock options to protect against further increases
Current Lender Behavior
The good news is that lending standards have relaxed significantly. As of June 2025, only 9% of banks are tightening their lending standards compared to 30.3% in April 2024 and 67.4% in April 2023. This means more capital is available for qualified borrowers.
Alternative lenders including debt funds and mortgage REITs have also expanded their market share, capturing 37% of non-agency closings in 2025. This competition benefits borrowers with more options and competitive pricing.
2026 Commercial Lending Market Snapshot
112%
YoY Lending Increase
$936B
CRE Mortgages Maturing
9%
Banks Tightening
37%
Alt Lender Share
How Do Commercial Mortgage Rates Compare to Other Financing Options?
Understanding how commercial mortgages stack up against alternative financing helps you evaluate your options comprehensively.
Commercial vs. Residential Rates
Commercial mortgage rates typically run 100 to 200 basis points higher than residential mortgage rates. This premium reflects the additional complexity, risk, and shorter terms associated with commercial properties.
However, commercial loans offer advantages including interest-only periods, non-recourse structures, and the ability to finance larger properties that would not qualify for residential programs.
Permanent Financing vs. Bridge Loans
Permanent commercial mortgages offer lower rates and longer terms but require stabilized properties with strong cash flow. Bridge loans provide faster execution and more flexible underwriting but at higher rates - typically 100 to 250 basis points above permanent financing.
The right choice depends on your property's current status and business plan. Value-add investors often use bridge financing during the renovation phase before refinancing into permanent debt once the property stabilizes.
Bank Loans vs. Alternative Lenders
Traditional bank loans generally offer the lowest rates for borrowers who meet their stringent qualification criteria. However, alternative lenders including debt funds, life insurance companies, and CMBS conduits may offer better terms for specific situations:
- Life Companies: Excellent rates for large, stabilized properties with strong tenants
- CMBS: Competitive rates with non-recourse structures and higher leverage
- Debt Funds: Flexible underwriting for transitional properties or unique situations
For a deeper understanding of what to expect across different scenarios, read our analysis of commercial loan interest rates.
Documentation Checklist for Commercial Mortgage Applications
| Category | Required Documents |
|---|---|
| Property | Rent roll, T-12 operating statements, tax bills, insurance, Phase I |
| Borrower | Personal financial statement, 2-3 years tax returns, bank statements |
| Entity | Formation documents, operating agreement, certificate of good standing |
| Transaction | Executive summary, business plan, sources and uses, pro forma |
What Documentation Do You Need to Apply for a Commercial Mortgage?
Preparing comprehensive documentation upfront accelerates the underwriting process and demonstrates professionalism to lenders.
Property Documentation
- Current rent roll with lease terms and tenant information
- Trailing 12-month operating statements
- Property tax bills and insurance declarations
- Recent appraisal (if available)
- Environmental reports (Phase I, Phase II if applicable)
- Property condition report
- Survey and title information
Borrower Documentation
- Personal financial statements for all guarantors
- Tax returns (2-3 years personal and entity)
- Schedule of real estate owned
- Entity formation documents
- Bank statements (3-6 months)
- Resume highlighting real estate experience
Loan Request Package
- Executive summary of the transaction
- Business plan for the property
- Sources and uses of funds
- Pro forma projections
- Comparable sales and rental data
- Market analysis supporting your assumptions
For complete requirements, see our guide on commercial real estate loan requirements.
Permanent Financing vs Bridge Loans
Permanent Financing
- Lower rates 5.13-8.75%
- Longer terms 5-25 years
- Stable monthly payments
- Stricter requirements
- Longer closing timeline
- Requires stabilized property
Bridge Loans
- Faster closing 2-4 weeks
- Flexible underwriting
- Works for transitional properties
- Higher rates 5.99%+
- Short terms 12-36 months
- Requires exit strategy
What Trends Should You Watch for Commercial Mortgage Rates in 2026?
Several factors will influence where commercial mortgage rates head throughout 2026.
Federal Reserve Policy
The Fed has signaled potential additional rate cuts later in 2026, but timing remains dependent on inflation data and employment trends. Markets currently expect one to two additional cuts by year-end, which would bring the federal funds rate to approximately 3.00% to 3.25%.
However, long-term rates may not follow short-term cuts proportionally. The 10-year Treasury yield responds more to growth and inflation expectations than Fed policy, and could remain elevated even if short-term rates decline.
Inflation Trajectory
Commercial real estate benefits from moderate inflation through rent growth and asset appreciation. However, persistent inflation could keep Treasury yields elevated and limit rate declines. Watch CPI and PCE readings for signals about the inflation trajectory.
Market Liquidity
CMBS issuance surged to $115.2 billion through November 2025 - the highest since 2007. This robust capital markets activity suggests continued liquidity and competitive lending conditions. Strong investor demand for commercial mortgage-backed securities helps keep rates competitive.
Property Sector Divergence
Expect continued rate divergence across property types. Multifamily and industrial will likely maintain their favorable rate positioning, while office may face ongoing challenges. Retail rates should improve as the sector continues its recovery in suburban markets.
Watch the Maturity Wall
Approximately $1.8 trillion in commercial loans mature in 2026. If your loan is among them and rates have risen since origination, prepare for potentially higher payments or consider bringing in additional equity to maintain your DSCR.
What Are Your Next Steps to Secure Commercial Financing?
Navigating commercial mortgage rates requires understanding both the macro environment and your specific situation. Here is how to move forward:
Step 1: Assess Your Property and Goals Determine your property type, target loan amount, and timeline. Consider whether you need permanent financing, bridge capital, or a specialized program like SBA lending.
Step 2: Gather Documentation Start compiling the documentation outlined above. Having materials ready demonstrates preparedness and accelerates the underwriting process.
Step 3: Calculate Your Numbers Use our commercial loan calculator and DSCR calculator to understand your debt service coverage and monthly payment obligations at various rate scenarios.
Step 4: Explore Your Options Research different lenders and loan programs to understand what is available for your situation. Consider conventional banks, SBA lenders, and alternative capital sources.
Step 5: Get Expert Guidance Commercial real estate financing involves significant complexity. Working with experienced professionals helps you navigate the process efficiently and avoid costly mistakes.
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At Clearhouse Lending, we specialize in matching commercial real estate investors with the right financing solutions. Our team understands the nuances of different property types, loan programs, and lender requirements.
Whether you are acquiring your first commercial property or refinancing a portfolio of assets, we can help you navigate today's rate environment and secure competitive terms.
Contact us today for a no-obligation consultation and personalized rate quote. Let us help you find the right commercial mortgage for your investment goals.