Commercial Mortgage Refinance Requirements

If you own commercial real estate and want to lower your rate, extend your term, or pull equity from your property, understanding commercial mortgage refinance requirements is the essential first step. Lenders evaluate refinance applications differently than purchase loans, with heavier emphasis on the property's current performance and your track record as an owner-operator.

This guide breaks down every qualification factor for commercial refinancing in 2026, including credit score minimums, DSCR thresholds, LTV limits, net worth requirements, seasoning rules, and the full documentation checklist. Whether you are refinancing a multifamily property through an agency loan, exploring an SBA 504 refinance, or seeking a commercial refinance through a bank or CMBS lender, these are the benchmarks you need to meet.

What Are the Core Requirements for a Commercial Mortgage Refinance?

Every commercial refinance application is evaluated on five core pillars: property cash flow (DSCR), loan-to-value ratio (LTV), borrower creditworthiness, net worth and liquidity, and property stabilization. Meeting the minimum threshold in all five areas is necessary for approval, and exceeding them unlocks better rates and terms.

The specific numbers vary by loan type. Agency loans from Fannie Mae and Freddie Mac have the most standardized requirements, while bank portfolio loans and bridge loans offer more flexibility at higher rates. The table below summarizes the minimum benchmarks across every major loan product available for commercial refinancing.

The most common reason for refinance denial is a DSCR that falls below the lender's minimum. If your property's net operating income does not comfortably cover the proposed debt service at today's higher interest rates, you may need to pay down the principal, increase rents, or reduce operating expenses before reapplying. Use our DSCR calculator to test different scenarios and see exactly where your property stands.

What Credit Score Do You Need to Refinance a Commercial Mortgage?

Most commercial refinance lenders require a minimum credit score of 660, with 680 or higher preferred for the best rates and terms. Agency lenders (Fannie Mae and Freddie Mac) and most banks set their floor at 680, while CMBS lenders may approve borrowers at 660. Bridge and hard money lenders are the most flexible, sometimes working with scores as low as 600 to 620.

Unlike residential mortgages where your credit score is the primary qualification factor, commercial lenders treat credit as one piece of a larger picture. A strong property with excellent cash flow can sometimes offset a mediocre credit score, but a perfect 800 credit score will not save a deal where the property underperforms.

Here is how credit score tiers affect your refinance options: borrowers at 750+ access the lowest rates with lenders competing for their business, 680 to 699 meets agency and bank minimums with slight rate premiums, 660 to 679 limits you to CMBS and select banks, and 620 to 659 restricts you to bridge and hard money at significantly higher rates. Below 620, consider adding a creditworthy guarantor.

If your score falls below threshold, focus on paying down credit card balances to under 30% utilization and correcting any errors on your credit report before applying.

What DSCR Do Lenders Require for Commercial Refinancing?

Lenders typically require a minimum DSCR of 1.20x for commercial refinancing, meaning the property's net operating income must be at least 120% of the annual debt service. Agency loans require 1.20x to 1.25x, CMBS loans require 1.25x, and bank loans generally fall in the 1.20x to 1.35x range depending on property type and market.

DSCR is calculated by dividing the property's net operating income (NOI) by the total annual debt service. For example, a property generating ,000 in annual NOI with ,000 in annual debt service has a DSCR of 1.25x.

The challenge in 2026 is that higher interest rates have compressed DSCRs. A property that achieved 1.40x at 4.5% may only produce 1.15x at 7.0%, even with no change in operating performance. Use our DSCR calculator to model scenarios and our commercial mortgage calculator to estimate payments at current rates.

Strategies to improve your DSCR before applying:

• Increase rents to market rate where leases allow
• Reduce operating expenses through better management or vendor renegotiation
• Eliminate vacancy by filling empty units or spaces
• Request a lower loan amount (bring cash to close the gap)
• Extend the amortization period to reduce annual debt service
• Consider an interest-only period for the first 1 to 3 years

What LTV Limits Apply to Commercial Refinancing?

The maximum loan-to-value ratio for commercial refinancing ranges from 65% to 90%, depending on the loan product and whether you are doing a rate-and-term or cash-out refinance. Agency multifamily loans allow up to 80% LTV for rate-and-term refinances, SBA 504 loans go up to 90%, and most bank and CMBS lenders cap at 75%.

Cash-out refinances carry lower LTV limits than rate-and-term refinances across every loan type. If you are pulling equity from your property, expect maximum LTVs of 65% to 75% rather than 75% to 80%. Lenders view cash-out transactions as higher risk because the borrower is increasing their leverage on the property.

LTV is determined by the lender's appraisal, not your purchase price. The appraised value uses the income capitalization approach and sales comparison approach. In today's higher cap rate environment, the income approach often produces lower values, which directly limits borrowing capacity.

If your desired loan amount exceeds the maximum LTV, you have several options:

• Bring additional equity to reduce the loan-to-value ratio
• Choose a different loan product with higher LTV limits (such as SBA 504)
• Demonstrate value-add improvements that justify a higher appraised value
• Consider supplemental or mezzanine financing to layer additional capital on top of a lower-LTV first mortgage
• Explore bridge financing as a temporary solution while you stabilize the property for a better permanent refinance

What Is the Difference Between Rate-and-Term and Cash-Out Refinancing?

A rate-and-term refinance replaces your existing loan with a new loan that has a better interest rate, a longer term, or both, with no cash proceeds to the borrower at closing. A cash-out refinance replaces the existing loan and provides the borrower with additional cash above the payoff amount, which can be used for renovations, acquisitions, debt consolidation, or any other purpose.

Rate-and-term refinances qualify for the most favorable terms because the borrower's leverage stays the same or decreases. Cash-out refinances face stricter underwriting since lenders want to understand how you plan to use the proceeds and the increased leverage raises their risk.

Many investors use cash-out refinances to recycle equity, extracting funds from stabilized properties to fund the next acquisition. Learn more about commercial loan down payment requirements to understand how refinance proceeds can fund your next deal.

What Documentation Do You Need for a Commercial Refinance?

Prepare property financials, personal financials, entity documents, and existing loan information before you apply. Having a complete documentation package ready on day one can shorten your closing timeline by 2 to 4 weeks and demonstrates professionalism to lenders.

The trailing 12-month operating statement (T-12) is the most important document. This shows actual revenue and expenses that lenders use to calculate NOI and DSCR. Your rent roll must be current (within 30 days), and lenders review each lease for term remaining, rental rate, and tenant creditworthiness.

For borrower documentation, two to three years of personal and entity tax returns are standard. Lenders cross-reference tax returns against operating statements to verify income consistency. Have your existing loan's payoff statement, note, and prepayment penalty calculation ready as well.

How Long Must You Own the Property Before Refinancing?

Most conventional commercial lenders require a seasoning period of 6 to 12 months after purchase before they will consider a refinance application. Agency lenders (Fannie Mae and Freddie Mac) typically require 12 months of ownership, while CMBS lenders may accept 6 to 12 months. Bridge and hard money lenders often have no seasoning requirement at all.

Seasoning requirements exist because lenders want to see that you have successfully operated the property and that the income you are reporting is sustainable, not artificially inflated for the application. A 12-month track record demonstrates seasonal variations in occupancy, realistic operating expenses, and stable tenant retention.

There are important exceptions to standard seasoning rules:

• Delayed financing: Some lenders allow refinancing immediately after an all-cash purchase, letting you recoup your capital quickly. The LTV is typically based on the lower of the purchase price or appraised value.
• Value-add properties: If you purchased a property, completed renovations, and significantly increased its value and NOI, some portfolio lenders will refinance based on the new appraised value after as few as 3 to 6 months.
• SBA loans: The SBA 504 program has no formal seasoning requirement for refinancing, though individual Certified Development Companies (CDCs) may impose their own guidelines.
• Bridge-to-permanent: If you used a bridge loan for acquisition and have stabilized the property, permanent lenders may refinance with shortened seasoning requirements based on the strength of the property's current performance.

What Net Worth and Liquidity Do Lenders Require?

Agency lenders require your net worth to equal or exceed the total loan amount, with post-closing liquidity of at least 9 to 12 months of debt service payments. CMBS lenders typically require net worth of at least 25% of the loan amount with 5% to 10% post-closing liquidity. Bank requirements vary but commonly fall in the 25% to 50% net worth range.

Net worth equals total assets minus total liabilities. Lenders consider both liquid and illiquid assets, though liquid assets carry more weight. Post-closing liquidity is equally important, confirming you have reserves after paying closing costs and escrow deposits:

• Agency loans: 9 to 12 months of debt service in liquid reserves
• CMBS loans: 6 to 12 months of debt service
• Bank loans: 3 to 6 months (varies widely)
• SBA loans: No formal liquidity requirement, but lenders assess adequacy

If your net worth falls short of requirements, consider adding a co-guarantor or key principal with sufficient net worth. Many partnerships and syndications include a high-net-worth guarantor specifically to meet these thresholds. Read our guide on SBA loans for commercial real estate to explore options that have lower net worth requirements.

What Property Conditions Must Be Met for Refinance Approval?

The property must be stabilized with a minimum occupancy of 85% to 90% for at least 90 consecutive days, free of deferred maintenance, and clear of environmental hazards. Lenders will order an independent appraisal, property condition assessment, and Phase I environmental site assessment as part of due diligence.

Stabilization is the most critical property-level requirement. Lenders examine trends, not just point-in-time metrics, so inconsistent occupancy or declining rents will create underwriting challenges. Multifamily and industrial properties are the easiest to refinance in 2026, while suburban office and hospitality face the toughest environment.

Common property-level issues that delay or derail refinances:

• Deferred maintenance (roof, HVAC, parking lot) that requires immediate capital expenditure
• Environmental contamination requiring remediation
• Below-market occupancy or recent significant tenant departures
• Lease rollover concentration (too many leases expiring within 12 months)
• Non-conforming zoning or building code violations
• Inadequate insurance coverage

Address any known property issues before applying. Proactively completing a property condition assessment and addressing deferred maintenance items demonstrates responsible ownership and removes potential roadblocks from the underwriting process.

How Much Does It Cost to Refinance a Commercial Mortgage?

Total closing costs for a commercial refinance typically range from 1% to 3% of the loan amount, plus any prepayment penalty on your existing loan. On a million refinance, expect closing costs of ,000 to ,000, excluding prepayment penalties.

Here is a breakdown of the most common closing cost components:

Origination fees (0.5% to 1.0% of the loan amount) are often negotiable, especially for strong deals with low LTV and high DSCR. Appraisal costs range from ,000 to ,000 depending on property type and complexity. Legal fees covering both borrower and lender attorney costs typically run ,000 to ,000 combined.

Prepayment penalties on your existing loan are often the largest cost. CMBS loans with yield maintenance can carry penalties of 5% to 20% of the remaining balance. Step-down penalties (5-4-3-2-1) found in bank loans are more predictable. Always request a prepayment calculation before committing.

To determine if refinancing is worthwhile, divide total costs (including prepayment penalties) by monthly savings. If the break-even period is shorter than your planned hold period, the refinance is justified.

What Steps Should You Follow to Refinance Your Commercial Mortgage?

Start by evaluating your current loan terms and prepayment penalty at least 6 months before your maturity date or when market conditions present an opportunity to improve your rate. The entire refinance process typically takes 45 to 90 days from application to closing, depending on the loan type and property complexity.

Here is what each phase involves:

Phase 1: Self-Assessment (Week 1). Calculate your current DSCR using our DSCR calculator, estimate your property value, and request a prepayment penalty quote. Compare your current rate to market rates using our commercial mortgage calculator.

Phase 2: Documentation (Weeks 1 to 2). Compile all required documents before approaching lenders. The checklist above covers everything you need.

Phase 3: Lender Shopping (Weeks 2 to 3). Submit to multiple lenders or work with a broker. Request a free refinance consultation from Clear House Lending to access our network of 6,000+ commercial lenders.

Phase 4: Due Diligence (Weeks 3 to 6). The lender orders appraisal, environmental assessment, property condition report, and title search. Respond quickly to all requests.

Phase 5: Underwriting (Weeks 4 to 8). The underwriting team reviews all documentation and property performance data. Stay responsive to information requests.

Phase 6: Closing (Weeks 6 to 12). Sign new loan documents, the new lender pays off your existing mortgage, and any cash-out proceeds are disbursed.

Frequently Asked Questions About Commercial Mortgage Refinancing?

Can you refinance a commercial mortgage with bad credit? Yes, though options are limited. Bridge and hard money lenders work with scores as low as 600 to 620 at higher rates (9% to 14%). Consider adding a creditworthy co-guarantor or improving your score before applying for conventional refinancing.

How soon can you refinance after purchasing a commercial property? Most conventional lenders require 6 to 12 months of seasoning. Agency lenders typically require 12 months. Bridge and hard money lenders often have no seasoning requirement, and some banks offer delayed financing after all-cash purchases.

What DSCR do I need to refinance a commercial property? The minimum DSCR is 1.20x for most products. Agency loans require 1.20x to 1.25x, CMBS requires 1.25x, and banks range from 1.20x to 1.35x. Use our DSCR calculator to check your ratio.

Is there a maximum loan amount for commercial refinancing? There is no universal maximum. Agency loans fund million+, CMBS handles million to million+, bank portfolios range from ,000 to million, and SBA 504 caps at million for the CDC portion. The practical limit depends on property value and borrower qualifications.

Can you do a cash-out refinance on commercial property? Yes. Cash-out refinances let you borrow above your existing balance and receive the difference at closing. Maximum LTV is typically 65% to 75%. Proceeds can fund improvements, acquisitions, or working capital.

What are typical closing costs for a commercial refinance? Expect 1% to 3% of the loan amount excluding prepayment penalties. On a million loan, budget ,000 to ,000 covering origination fees, appraisal, legal, title, and environmental costs.

How long does a commercial mortgage refinance take? Typically 45 to 90 days from application to closing. Agency and CMBS trend toward 60 to 90 days, bank portfolios close in 30 to 60 days, and bridge loans can close in 2 to 4 weeks. Complete documentation is the best way to accelerate your timeline.

Should you use a broker or go directly to a lender for refinancing? A broker gives you access to multiple lenders through a single application, often producing more competitive offers through lender competition. Direct relationships work if you have an established banking partner, but you may leave money on the table. Clear House Lending works with 6,000+ commercial lenders to match your refinance with the best terms.

Commercial mortgage refinancing can significantly improve your cash flow, reduce risk, and unlock equity for portfolio growth. The key is understanding requirements before you apply, preparing complete documentation, and shopping your deal across multiple lenders to secure the best terms. Start your refinance evaluation today with our free tools: the DSCR calculator and commercial mortgage calculator.

Ready to explore your refinance options? Contact Clear House Lending for a free, no-obligation consultation. Our team will review your property, assess your qualifications, and match you with the most competitive refinance options from our network of 6,000+ commercial lenders.

Sources: Fannie Mae Multifamily Selling and Servicing Guide (2025), Freddie Mac Optigo Seller/Servicer Guide (2025), SBA Standard Operating Procedure 50 10 7.1, Mortgage Bankers Association Commercial/Multifamily Lending Report (2025), National Association of Realtors Commercial Real Estate Outlook (2025), Federal Reserve Senior Loan Officer Survey (Q4 2025).