Refinancing multifamily properties is one of the most effective strategies apartment investors use to lower borrowing costs, pull out equity, and reposition their portfolios for growth. Whether you own a 10-unit walk-up or a 300-unit garden-style community, the refinancing landscape in 2026 offers several competitive options across agency, CMBS, bank, and life insurance company channels. This guide breaks down every major loan program, walks through current rates and underwriting requirements, and helps you decide when and how to refinance your multifamily asset for maximum financial benefit.
What Does Refinancing a Multifamily Property Actually Involve?
Refinancing a multifamily property means replacing your existing mortgage with a new loan that carries different terms, a different rate, or a higher principal balance. The process closely mirrors a new acquisition loan. You will go through underwriting, provide a current rent roll and trailing 12-month operating statement, order a new appraisal, and close with a title company. The key difference is that you already own the asset, so the lender evaluates your track record of operating the property alongside the standard financial metrics.
Most multifamily refinances fall into two categories. A rate-and-term refinance replaces your current loan with one that offers a lower interest rate, longer amortization, or more favorable prepayment terms. A cash-out refinance lets you borrow against the equity you have built through appreciation, debt paydown, or value-add improvements. Both paths require the property to meet the lender's minimum DSCR and LTV thresholds.
The timeline from application to funding typically runs 45 to 90 days depending on the loan program. Agency loans through Fannie Mae or Freddie Mac often close in 45 to 60 days, while CMBS conduit loans and HUD-insured loans may take 60 to 120 days. Working with an experienced commercial mortgage broker can shave weeks off this process by packaging a complete loan submission from day one.
Why Are So Many Multifamily Owners Refinancing Right Now?
The primary driver is the massive wave of loan maturities hitting the market between 2025 and 2027. Over billion in commercial real estate loans are scheduled to mature during this period, and multifamily properties represent the single largest share. Owners who locked in short-term bridge loans or floating-rate debt during the acquisition frenzy of 2021 and 2022 are now facing mandatory refinancing events as those loans reach their maturity dates.
Beyond maturing loans, many investors are refinancing to escape floating-rate exposure. As the Federal Reserve held rates higher for longer than many borrowers expected, monthly debt service on floating-rate loans climbed substantially. Locking into a fixed-rate agency or CMBS loan provides predictable payments and protects cash flow from future rate volatility.
A third motivation is equity harvesting. Investors who purchased multifamily properties before 2022 and executed value-add business plans have seen significant equity accumulation. Refinancing allows them to pull that equity out tax-free and redeploy it into additional acquisitions. This recycling of capital is a cornerstone of portfolio growth strategy, and the refinance programs available today are designed with exactly this use case in mind.
What Are the Best Loan Programs for Multifamily Refinancing?
Agency loans from Fannie Mae and Freddie Mac are the gold standard for stabilized multifamily refinancing, and they should be your first consideration if your property qualifies. These government-sponsored enterprises offer the lowest rates, highest leverage, longest terms, and most borrower-friendly features in the market. Fannie Mae's Delegated Underwriting and Servicing (DUS) program and Freddie Mac's Optigo platform both provide fixed-rate loans with terms from 5 to 30 years, maximum LTVs up to 80%, and non-recourse structures.
CMBS conduit loans serve as a strong alternative for properties that may not meet agency standards or for borrowers who need specific structuring flexibility. CMBS lenders package loans into securities sold on the bond market, which means underwriting focuses heavily on the property's cash flow rather than the borrower's balance sheet. The tradeoff is less flexibility after closing, particularly around prepayment (defeasance is standard) and the inability to access supplemental financing.
Bank and credit union loans work well for smaller multifamily properties, typically under 50 units, where borrower relationships and local market knowledge drive the underwriting decision. These loans often feature lower closing costs and more flexible prepayment terms, but they come with shorter terms (typically 3 to 10 years) and may require partial or full recourse.
Life insurance company loans are ideal for Class A stabilized assets in primary markets. These lenders are conservative but offer very competitive rates and terms for properties that meet their underwriting box. Minimum loan sizes are typically million to million.
For properties in transition, a bridge loan may be the right first step before refinancing into permanent financing. Bridge lenders can close quickly on properties undergoing renovation, lease-up, or stabilization, allowing you to execute your business plan before seeking long-term debt.
What Interest Rates Should You Expect for Multifamily Refinancing in 2026?
Rates for multifamily refinancing in 2026 are hovering in the mid-5% to mid-7% range depending on the loan program, leverage, and property quality. Agency fixed rates for stabilized properties are generally pricing between 5.50% and 6.50%, with the best execution going to lower-leverage deals in strong markets. CMBS rates run roughly 50 to 75 basis points higher, while bank loans are pricing in the 6.25% to 7.50% range.
These rates represent a modest increase from late-2025 levels, driven primarily by the 10-year Treasury yield holding in the 4.35% to 4.50% range through early 2026. Spreads over Treasuries have actually compressed for agency loans, reflecting strong investor demand for agency mortgage-backed securities. This compression partially offsets the higher base rate environment.
The rate you receive will depend on several property-specific and borrower-specific factors. Lower LTV requests (under 65%) typically earn rate discounts of 10 to 25 basis points. Properties with strong DSCR coverage above 1.40x may qualify for additional rate improvements. Geographic location, property age and condition, tenant quality, and lease rollover risk all factor into the final pricing.
To model what your specific refinance payment might look like, use our commercial mortgage calculator to run different rate and term scenarios.
How Do LTV and DSCR Requirements Work for Multifamily Refinancing?
LTV and DSCR are the two primary sizing constraints that determine how much you can borrow. Every lender calculates both, and your loan amount will be limited by whichever metric is more restrictive. LTV (loan-to-value) compares your requested loan amount to the property's appraised value. DSCR (debt service coverage ratio) compares the property's net operating income to the proposed annual debt service.
For agency loans, the standard maximum LTV is 80% with a minimum DSCR of 1.25x. This means the property must generate at least .25 in net operating income for every .00 in annual mortgage payments. In practice, most agency refinances land in the 70% to 75% LTV range because DSCR becomes the binding constraint at higher leverage levels, especially in today's rate environment.
Here is a practical example. Say your multifamily property appraises at million and generates ,000 in annual NOI. At 80% LTV, you could borrow up to .4 million. But at a 6.0% rate with 30-year amortization, annual debt service on a .4 million loan would be approximately ,800, producing a DSCR of only 1.13x, well below the 1.25x minimum. The lender would size the loan down to approximately .5 million to achieve the required coverage ratio.
Use our DSCR calculator to run these numbers for your specific property. Understanding where your deal falls on both the LTV and DSCR spectrum will help you set realistic expectations before approaching lenders.
Ready to see what refinancing terms your multifamily property qualifies for? Contact our team for a free rate quote and loan sizing analysis.
What Closing Costs Should You Budget for a Multifamily Refinance?
Closing costs for a multifamily refinance typically run between 1.5% and 3.0% of the loan amount, depending on the program and complexity. On a million refinance, expect total closing costs in the range of ,000 to ,000. The largest single expense is usually the origination fee, which ranges from 0.50% to 1.00% of the loan amount for most programs.
Beyond the origination fee, you will need to budget for a new appraisal (,000 to ,000 depending on property size), legal and title costs (,000 to ,000), environmental reports (,000 to ,000), property condition assessments (,000 to ,000), and various lender-required third-party reports. Agency and CMBS loans also include rate lock deposits and ongoing servicing fees.
One often-overlooked cost is the prepayment penalty on your existing loan. If you are refinancing before your current loan's maturity date, you may owe yield maintenance, defeasance costs, or a declining percentage penalty. These costs can range from modest (1% to 2% of the remaining balance in the final years of a step-down schedule) to substantial (full yield maintenance can sometimes equal 10% or more of the outstanding balance). Always calculate this cost before committing to a refinance to ensure the savings justify the expense.
For a deeper look at equity requirements and cost structures for commercial loans, see our guide on commercial loan down payment requirements.
How Does the Maturity Wall Affect Multifamily Refinancing in 2025 and 2026?
The maturity wall refers to over .5 trillion in commercial real estate loans maturing between 2025 and 2027, with multifamily at 35% to 40% of the total.
Many loans originated in 2021 and 2022 were underwritten at 3% to 4% rates with tighter cap rates. Refinancing today means higher debt service and potentially reduced proceeds.
The opportunity: lenders are competing for quality multifamily business. Agency lenders have volume targets that translate into competitive pricing for clean deals. Properties with stagnant NOI or high vacancy should explore options 12 to 18 months before maturity.
What Is the Step-by-Step Process for Refinancing a Multifamily Property?
The refinancing process follows a predictable sequence spanning 45 to 90 days from application to funding. Here are the key stages.
Step 1: Preparation and Loan Sizing (Weeks 1 to 2). Gather your trailing 12-month operating statements, current rent roll, capital expenditure history, and borrower financial statements. Get preliminary loan sizing and rate quotes from multiple sources.
Step 2: Application and Rate Lock (Weeks 2 to 3). Submit a formal application with the required documentation. For agency loans, you can typically lock your rate at application. CMBS loans generally lock at or near closing, leaving you exposed to rate movements.
Step 3: Underwriting and Due Diligence (Weeks 3 to 6). The lender orders third-party reports (appraisal, Phase I ESA, property condition assessment) and analyzes your property's financials, market position, and physical condition.
Step 4: Commitment and Legal (Weeks 6 to 8). The lender issues a loan commitment. Legal counsel prepares loan documents, and the title company runs the title search.
Step 5: Closing and Funding (Weeks 8 to 10). You sign loan documents, the title company records the new mortgage, and any cash-out proceeds are distributed.
When Is the Right Time to Refinance Your Multifamily Property?
The right time depends on market conditions, loan terms, and investment strategy.
Refinance when your loan is 12 to 18 months from maturity. Starting early gives you time to shop lenders and negotiate from strength.
Refinance when rates drop meaningfully below your current rate. A general rule of thumb is that a rate reduction of 75 basis points or more on a large loan typically justifies the closing costs within 18 to 24 months. On a million loan, dropping from 7.5% to 6.0% saves nearly ,900 per month, or almost ,000 per year.
Refinance after completing a value-add business plan to recapture invested capital through a cash-out refinance. Refinance floating-rate loans when you want payment certainty.
Do not refinance if your prepayment penalty exceeds anticipated savings, if cash flow issues will resolve within 6 to 12 months, or if you plan to sell within 2 to 3 years.
How Does Multifamily Refinancing Compare to Other Property Types?
Multifamily refinancing enjoys the most favorable lending environment of any commercial real estate property type. The primary reason is the involvement of Fannie Mae and Freddie Mac, whose congressional mandate to support housing finance provides a constant, deep pool of capital for apartment loans regardless of broader market conditions.
This agency backstop gives multifamily borrowers access to higher leverage (up to 80% LTV vs. 65% to 75% for other types), lower rates (typically 25 to 75 basis points below comparable office or retail financing), longer terms (up to 30 years fixed), and non-recourse structures. Compare this to office refinancing, which has become extremely challenging due to remote work trends, or retail, which faces e-commerce headwinds.
For borrowers exploring various commercial financing options, including SBA loans for commercial real estate, the multifamily sector stands apart in both breadth of programs and competitiveness of terms.
What Are Common Mistakes to Avoid When Refinancing Multifamily Properties?
The most expensive mistake is waiting too long to start. Borrowers who begin exploring options just 3 to 6 months before loan maturity often accept whatever terms are available. Start the process 12 to 18 months before your loan matures.
Another frequent error is failing to shop multiple lenders. The difference between the best and worst quote can easily exceed 50 to 100 basis points in rate. Always obtain quotes from at least 3 to 5 lenders across different channels (agency, CMBS, bank, and life company).
Borrowers also underestimate presentation quality. A clean, well-organized loan package with clear financials and a professional rent roll accelerates underwriting and positions your deal as institutional-quality. Other pitfalls include neglecting prepayment penalties, overestimating property value, and confusing in-place NOI with the pro forma NOI that lenders will underwrite.
Avoid costly refinancing mistakes by working with experienced advisors. Get in touch with our multifamily lending team to discuss your refinancing strategy.
Frequently Asked Questions About Refinancing Multifamily Properties?
What is the minimum property size for a multifamily refinance? Most commercial lenders require 5+ units. Properties with 2 to 4 units use residential programs. Agency small balance platforms start at ,000 to million.
Can I refinance a multifamily property that is not fully stabilized? Yes, but options differ. Properties below 90% occupancy typically do not qualify for agency or CMBS financing. Bridge lenders will finance properties in transition at higher rates. Once stabilized (90%+ occupancy for 90 days), you can refinance into permanent debt.
How much cash can I pull out in a multifamily refinance? Cash-out is limited by LTV and DSCR constraints. On an agency loan at 75% LTV, you can pull out any amount up to 75% of the appraised value minus your existing loan balance. There is no separate cap on cash-out proceeds for most programs. For a property appraised at million with a million existing loan, a 75% LTV refinance would provide up to .5 million in cash-out.
Do I need to re-qualify personally for a multifamily refinance? For non-recourse loans, the focus is on the property. Lenders still review net worth (typically equal to loan amount), liquidity (9 to 12 months of debt service), and credit. Recourse bank loans require more rigorous personal qualification.
What is the difference between yield maintenance and defeasance? Yield maintenance requires a lump sum compensating the lender for lost interest. Defeasance requires purchasing Treasury securities to replicate the remaining payment stream. Defeasance is standard for CMBS and typically more expensive. Agency loans offer yield maintenance or declining schedules with more flexibility.
How long does a multifamily refinance take from start to finish? Agency loans close in 45 to 60 days. CMBS loans take 60 to 90 days. Bank loans close in 30 to 45 days. HUD 223(f) loans take 90 to 180 days due to government processing.
Can I refinance if my property has deferred maintenance? Yes, but you may need a repair escrow. Lenders will fund the refinance if you deposit sufficient funds to complete required repairs within 12 to 24 months, as identified by the property condition report.
Should I refinance into a fixed or floating rate? For stabilized properties, fixed-rate loans provide payment certainty. Floating-rate loans make sense when you plan to sell within 1 to 3 years or need prepayment flexibility. Most refinances today are moving to fixed-rate structures.
Contact Clearhouse Lending today for a personalized multifamily refinancing analysis. Our team specializes in agency, CMBS, and bank financing for apartment properties of all sizes.
Sources
- Fannie Mae Multifamily Market Commentary, Q4 2025
- Freddie Mac Multifamily Outlook Report, 2026
- Mortgage Bankers Association Commercial/Multifamily Lending Report, 2025
- MSCI Real Capital Analytics, Multifamily Transaction and Financing Trends, 2025
- Federal Reserve Economic Data (FRED), 10-Year Treasury Yield Historical Data
- CoStar Group, Multifamily Market Analytics, Q1 2026
- Trepp CMBS Research, Loan Maturity Analysis, 2025
- National Multifamily Housing Council, Quarterly Survey of Apartment Market Conditions, 2025