Student Housing Financing: Complete Loan Guide

Student housing financing provides commercial real estate investors with a pathway into one of the most resilient and high-performing asset classes in the multifamily sector. Purpose-built student housing (PBSH) has consistently outperformed traditional apartments in occupancy rates and rent growth, making it an attractive target for both new and experienced investors. If you are evaluating student housing financing for the first time, this guide breaks down every loan type, rate range, qualification requirement, and underwriting nuance you need to know.

Whether you are acquiring a stabilized property near a flagship university, developing a ground-up project, or repositioning an older asset for the student market, the right financing structure can significantly impact your returns. The key is matching your deal to the right loan product and lender. Use our commercial mortgage calculator to model payments across different scenarios before you start shopping for a loan.

What Makes Student Housing a Strong Investment in 2026?

Student housing remains one of the strongest commercial real estate asset classes heading into 2026, driven by rebounding enrollment, limited new supply in top markets, and rent growth that continues to outpace traditional multifamily. The fundamentals are straightforward: universities keep growing, on-campus housing cannot keep up, and students need somewhere to live.

U.S. college enrollment has been recovering steadily since the pandemic-era dip, with total enrollment approaching 20 million students by fall 2026. The National Student Clearinghouse Research Center reported enrollment increases for three consecutive years through 2025, fueled by community college rebounds and growing international student populations. Meanwhile, new PBSH supply deliveries have remained constrained relative to demand in most top-50 university markets.

The investment case is supported by several structural advantages that traditional multifamily does not share. Student housing leases are typically co-signed by parents, which reduces default risk. Properties near Tier 1 universities maintain occupancy above 95% even during economic downturns, because students continue to enroll regardless of job market conditions. And per-bed rent structures allow operators to generate significantly higher revenue per square foot compared to conventional apartments.

For investors exploring their first commercial deal, student housing offers a compelling entry point. Learn more about getting started in our guide on how to get a commercial loan with no experience.

How Does Purpose-Built Student Housing Differ from Traditional Multifamily?

Purpose-built student housing operates on a fundamentally different model than traditional multifamily. The most important distinction is the by-the-bed lease structure, which means each bedroom in a unit is leased individually to a separate tenant. This approach maximizes revenue per unit and reduces vacancy risk because the loss of one tenant does not leave an entire unit empty.

PBSH properties are designed specifically for college students, featuring amenities like study lounges, high-speed internet throughout the building, fitness centers, resort-style pools, computer labs, and sometimes shuttle service to campus. These amenities drive higher rents and stronger pre-leasing activity. The lease cycle is also unique: most student housing leases run August to July, with pre-leasing starting the previous fall or winter.

From a financing perspective, lenders view PBSH differently than conventional multifamily. They pay special attention to the property proximity to campus (ideally within 1 mile or on a direct transit route), the university enrollment trajectory, competing supply in the submarket, and the pre-lease velocity each year. Properties within walking distance of Tier 1 universities command the tightest cap rates and the best loan terms.

The operational differences also affect underwriting. Student housing typically has higher turnover costs due to annual lease cycles, higher marketing expenses for pre-leasing campaigns, and seasonal occupancy fluctuations during summer months. Lenders factor these into their cash flow analysis and may require reserves for these predictable expenses.

What Loan Types Are Available for Student Housing Properties?

Multiple loan products are available for student housing financing, ranging from government-backed agency loans to short-term bridge financing. The right choice depends on the property stabilization status, your investment timeline, and whether you are acquiring, refinancing, or developing. Below is a comprehensive comparison of the most common options.

Agency Loans (Fannie Mae and Freddie Mac)

Agency loans are the gold standard for stabilized student housing properties. Fannie Mae and Freddie Mac both have dedicated student housing programs that offer competitive rates, high leverage, and non-recourse structures. To qualify, the property typically needs to be within 2 miles of a university with enrollment above 10,000, maintain occupancy above 90%, and demonstrate at least 12 months of stable operating history.

Agency lenders look for strong DSCR ratios of 1.25x or higher. Use our DSCR calculator to verify whether your property meets this threshold before applying.

Bridge Loans for Value-Add and Lease-Up

If you are acquiring a student housing property that needs renovation, rebranding, or is in lease-up, a bridge loan is often the best starting point. Bridge lenders will finance properties at below-stabilized occupancy and provide capital for improvements, with the plan to refinance into permanent financing once the property reaches stabilization.

Bridge loan terms are typically 1 to 3 years with extension options, interest-only payments, and floating rates in the 8 to 11% range. The higher cost is offset by the flexibility to execute a value-add business plan. Learn more about bridge loan programs and how they work for transitional assets.

SBA Loans for Owner-Occupied Student Housing

Small Business Administration loans, particularly the SBA 504 program, can be an excellent option for smaller student housing investments where the borrower occupies part of the property or operates it as a primary business. SBA loans offer down payments as low as 10% and terms up to 25 years, making them attractive for first-time investors. For a detailed breakdown, see our guide on SBA loans for commercial real estate.

Construction Loans for Ground-Up Development

Developing new PBSH requires construction financing, which is structured as a short-term loan with draws disbursed as construction milestones are completed. Lenders will underwrite the deal based on projected stabilized value and require 25 to 40% equity from the developer. Construction loan rates typically fall in the 8 to 11% range, with terms of 18 to 36 months.

Acquisition Loans for Stabilized Properties

For stabilized student housing assets generating consistent cash flow, acquisition loans through banks, credit unions, or CMBS conduits offer competitive permanent financing. These loans feature 5 to 10 year terms with 25 to 30 year amortization schedules, providing predictable long-term debt service.

What Interest Rates and Terms Should You Expect?

Student housing interest rates in 2026 range from approximately 5.75% for the best agency deals on stabilized Tier 1 properties to 11% or higher for bridge loans and construction financing on riskier deals. The rate you receive depends on your loan type, property quality, university tier, leverage, borrower strength, and market conditions.

Agency loans on stabilized PBSH near Power 5 or flagship universities currently price between 5.75% and 7.25%, depending on leverage, DSCR, and term length. CMBS conduit loans for student housing fall in the 6.25% to 8.00% range. Bank and credit union loans vary widely based on the relationship but generally land between 6.50% and 8.50%.

Bridge loans for value-add student housing deals price higher at 8.00% to 11.00%, reflecting the transitional nature of the collateral. Construction loans carry similar rates. Mezzanine and preferred equity financing, used to bridge the gap between senior debt and borrower equity, ranges from 12% to 18%.

Key term considerations for student housing financing include:

• Amortization: Most permanent loans offer 25 to 30 year amortization, keeping debt service manageable
• Interest-only periods: Available on many agency and CMBS loans for the first 1 to 3 years
• Prepayment provisions: Yield maintenance and defeasance are common on agency and CMBS deals
• Recourse vs. non-recourse: Agency and CMBS are typically non-recourse; bank loans may require personal guarantees

How Do Lenders Underwrite Student Housing Loans?

Lenders underwrite student housing by evaluating both the property income performance and the strength of the underlying student demand drivers. The analysis goes deeper than a typical multifamily underwrite because of the unique risk factors tied to university enrollment, seasonal occupancy, and by-the-bed lease structures.

The core underwriting metrics remain the same as other commercial property types, but the benchmarks may differ. Lenders want to see a debt service coverage ratio of at least 1.20x to 1.30x, a loan-to-value ratio of 65% to 75%, trailing 12-month occupancy above 90%, and borrower net worth equal to or exceeding the loan amount.

Beyond these standard metrics, student housing lenders evaluate several unique factors:

University Quality and Enrollment Trends: Lenders assess the university enrollment trajectory over the past 5 to 10 years, acceptance rates, retention rates, and planned expansion. Growing enrollment is a strong positive signal. Declining enrollment is a significant red flag.

Supply and Demand Dynamics: The lender will study how many competing student housing beds exist within the submarket, what new supply is under construction or planned, and what the absorption rate looks like. Overbuilt markets receive lower leverage and higher rates.

Pre-Lease Performance: As mentioned earlier, pre-lease velocity is critical. Lenders want to see that the property consistently achieves 80% or higher pre-lease rates by spring for the upcoming academic year.

Distance to Campus: Properties within 0.5 miles of campus command the best terms. Properties 1 to 2 miles away are still financeable but may receive slightly lower leverage. Beyond 2 miles, most dedicated student housing lenders lose interest.

What Down Payment and Equity Is Required?

Down payment requirements for student housing financing typically range from 10% to 40% depending on the loan type, property status, and borrower profile. Stabilized properties with strong cash flow require less equity, while development and value-add deals demand more skin in the game.

For stabilized PBSH acquisitions, agency loans require 25% to 35% equity, CMBS loans require 30% to 35%, and bank loans require 25% to 35%. SBA 504 loans stand out as the most leveraged option at only 10% down, though they come with owner-occupancy requirements and other restrictions.

Bridge loans for value-add student housing typically require 20% to 35% equity based on the purchase price or as-is value. Construction loans require the most equity at 25% to 40% of total project cost, reflecting the development risk involved.

For a deeper look at equity requirements across all commercial property types, read our guide on commercial loan down payment requirements.

To reduce your out-of-pocket equity, consider these strategies:

• Mezzanine financing: Layer subordinate debt above the senior loan to reach 80 to 85% of total capitalization
• Preferred equity partners: Bring in passive investors who contribute equity in exchange for a preferred return
• Seller financing: Negotiate a seller-held second mortgage to reduce your equity requirement
• Assumed debt: If the property has existing favorable financing, a loan assumption can reduce closing costs

Ready to discuss your specific deal structure? Contact our commercial lending team to explore your options.

What Are the Top Markets for Student Housing Investment?

The best student housing markets share a common set of characteristics: large and growing enrollment at nearby universities, limited competing supply, strong rent growth trends, and high barriers to new construction. Markets anchored by Power 5 conference schools and flagship state universities consistently attract the most investor capital.

Top-performing student housing markets in 2025 and 2026 include:

• Austin, TX (UT Austin): 50,000+ enrollment, strong rent growth, high barriers to entry
• Tuscaloosa, AL (University of Alabama): Enrollment growth, limited new supply, strong pre-lease rates
• Athens, GA (University of Georgia): Consistent demand, constrained supply pipeline, rising rents
• Tempe/Phoenix, AZ (Arizona State): Largest U.S. university by enrollment, massive ongoing demand
• Gainesville, FL (University of Florida): Top-ranked flagship, growing enrollment, tight supply
• College Station, TX (Texas A&M): Record enrollment growth, very high occupancy rates
• State College, PA (Penn State): Strong brand, limited developable land, consistent demand
• Columbus, OH (Ohio State): 60,000+ enrollment, diverse economy supports market stability

Investors should focus on markets where the university is the economic anchor and enrollment has demonstrated consistent growth. Avoid markets where enrollment is declining or where a pipeline of new supply threatens to outpace absorption.

How Can You Finance Student Housing With No Prior Experience?

First-time student housing investors face additional scrutiny from lenders, but several pathways exist to secure financing without a track record in this specific asset class. The key is demonstrating relevant transferable experience, partnering strategically, and choosing the right loan product.

If you have experience in traditional multifamily or other commercial real estate, lenders will often credit that experience toward a student housing deal. The operational fundamentals of leasing, property management, and financial reporting overlap significantly. Highlight this experience prominently in your loan application.

For investors with limited commercial real estate experience of any kind, consider these approaches:

• Partner with an experienced operator: Bring on a co-sponsor or key principal who has student housing experience. This addresses the lender experience requirement while you learn the business.
• Start with SBA financing: SBA loan programs are more accommodating of first-time borrowers, especially if you plan to be actively involved in managing the property.
• Hire professional management: Engaging a reputable student housing management company (such as Asset Living, Campus Advantage, or Greystar) signals to lenders that the property will be professionally operated regardless of your personal experience level.
• Target smaller deals: A 20 to 50 bed property near a regional university is a more accessible entry point than a 500-bed high-rise near a Power 5 campus.

Our comprehensive guide on how to get a commercial loan with no experience covers additional strategies that apply across all commercial property types.

What Risks Should Student Housing Investors Understand?

Student housing carries unique risks that differ from traditional multifamily, and understanding these risks is essential for both your investment decision and your loan application. Lenders will evaluate how well you understand and mitigate these factors.

Enrollment Decline Risk: The single biggest risk in student housing is a sustained decline in enrollment at the anchor university. Demographic shifts, changes in admissions policy, loss of accreditation, or reputational damage can all reduce demand for off-campus housing. Mitigate this by targeting universities with diversified programs, strong research funding, and growing enrollment trends.

Seasonal Vacancy: Most student housing experiences reduced occupancy during summer months (May through August). Some operators offer short-term summer leases to non-students, internship housing, or conference accommodations to offset this seasonal gap. Lenders underwrite based on the 12-month average, so summer vacancy is expected and priced in.

Turnover Costs: Annual lease cycles mean nearly 100% of the property turns over each year. Budget $500 to $1,500 per bed for annual make-ready costs, including cleaning, painting, carpet replacement, and minor repairs. This is significantly higher than traditional multifamily turnover expenses.

Regulatory Risk: Some municipalities near universities have enacted ordinances restricting the density, height, or location of new student housing developments. Zoning changes can impact both existing properties and development pipeline opportunities.

Competition from On-Campus Housing: University housing master plans sometimes include new on-campus construction that can temporarily impact off-campus demand. Monitor the university capital planning documents for any announcements.

What Documents Do You Need to Apply for a Student Housing Loan?

Preparing a complete loan package accelerates the underwriting process and demonstrates professionalism to lenders. Student housing loan applications require both standard commercial loan documents and several items specific to the student housing asset class.

Borrower Documents

• Personal financial statement for all guarantors and key principals
• Two to three years of personal and business tax returns
• Schedule of real estate owned with property details and debt balances
• Resume highlighting relevant real estate and management experience
• Entity formation documents (operating agreement, articles of organization)
• Bank statements showing liquidity and reserves

Property Documents

• Current rent roll showing occupancy by bed and unit
• Three years of operating statements (trailing 12-month format preferred)
• Pre-lease report showing leasing velocity for the upcoming academic year
• Property management agreement or proposed management plan
• Capital expenditure history and planned improvements
• Environmental Phase I assessment
• Survey and site plan

Market Documents

• University enrollment data for the past 5 years
• Competing supply analysis within 2-mile radius
• Submarket rent comparable data
• University housing master plan (if available)

Contact our team today for a customized document checklist for your specific student housing deal.

Frequently Asked Questions About Student Housing Financing?

What DSCR do I need for a student housing loan? Most lenders require a minimum DSCR of 1.20x to 1.30x for student housing, meaning the property must generate at least 20 to 30% more net operating income than the annual debt service. Agency lenders typically require 1.25x or higher. Bridge lenders may accept 1.00x to 1.10x for value-add properties with a clear path to stabilization.

Can I get a student housing loan with no experience? Yes, but you will likely need to partner with an experienced operator, hire professional student housing management, or pursue SBA financing that is more accommodating of first-time borrowers. Lenders want assurance that the property will be competently managed regardless of your personal track record.

What is the minimum down payment for student housing? Down payments range from 10% (SBA 504) to 40% (construction loans). Most stabilized acquisitions require 25% to 35% equity. For details on equity requirements, see our guide on commercial loan down payment requirements.

Are student housing loans recourse or non-recourse? It depends on the loan type. Agency (Fannie Mae/Freddie Mac) and CMBS loans are typically non-recourse, meaning the lender can only pursue the property as collateral in case of default. Bank loans and bridge loans often require personal recourse or partial guarantees.

How important is proximity to campus? Extremely important. Properties within 0.5 miles of campus receive the best financing terms and highest valuations. Properties 1 to 2 miles away are still financeable, but terms may be slightly less favorable. Beyond 2 miles, most dedicated student housing lenders will not consider the deal unless it is on a direct transit line to campus.

What cap rate should I expect for student housing? Cap rates vary by university tier. Tier 1 properties near Power 5 and flagship schools trade at 4.5% to 5.5%. Tier 2 markets range from 5.25% to 6.25%. Tier 3 regional universities see cap rates of 6.0% to 7.0%. Smaller schools and community college markets may require 7.0% to 8.5% cap rates to attract investors.

Can I use a DSCR loan for student housing? Yes. DSCR-based lending programs are available for student housing, particularly for investors who want to qualify based on the property cash flow rather than personal income. These programs are especially popular with investors building portfolios of multiple student housing properties.

What is the typical timeline from application to closing? Expect 45 to 90 days for most student housing loans. Agency loans typically take 60 to 90 days. Bridge loans can close in 30 to 45 days. SBA loans may take 60 to 120 days due to the government approval process. Having your documents prepared in advance can shorten the timeline significantly.

Student housing financing offers compelling opportunities for investors who understand the unique dynamics of the PBSH market. With enrollment trends supporting sustained demand, strong occupancy fundamentals, and multiple financing pathways available, 2026 is shaping up as an excellent year to enter or expand in this asset class.

Ready to explore student housing financing for your next investment? Contact Clear House Lending today for a free consultation. Our team has access to over 6,000 commercial lenders and can match your deal with the most competitive terms available.

Sources: National Center for Education Statistics (NCES), National Student Clearinghouse Research Center, CBRE U.S. Student Housing Report, RealPage Analytics, Yardi Matrix Student Housing Report, National Multifamily Housing Council (NMHC), Fannie Mae and Freddie Mac Student Housing Guidelines.