Boston property owners face a pivotal moment in commercial real estate financing. With approximately $936 billion in commercial real estate loans maturing nationally in 2026 and Massachusetts commercial mortgage rates starting around 5.18%, the decision of when and how to refinance your Boston property could save or cost you hundreds of thousands of dollars.
Whether you are looking to lower your interest rate, pull equity from an appreciated asset, restructure debt before a balloon payment, or convert a bridge loan to permanent financing, this guide covers every aspect of commercial refinancing in the Boston market.
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Why Are So Many Boston Property Owners Refinancing Right Now?
The commercial real estate refinancing landscape in Boston is shaped by several converging forces that are pushing property owners to act. Understanding these market dynamics helps you time your refinance for maximum benefit.
The maturity wall is the most urgent factor. According to industry projections, roughly $936 billion in commercial real estate loans are set to mature in 2026, nearly 19% more than the 2025 estimate. Many of these loans were originally set to mature in 2024 and 2025 but were extended by lenders and borrowers hoping for better rate conditions. That extension period is running out, and Boston property owners holding maturing debt need a clear refinance strategy.
The rate environment has shifted meaningfully. After peaking above 8% in 2023 and 2024, the prime rate settled at 6.75% as of December 2025, creating more favorable conditions for refinancing. Commercial mortgage loan spreads remained stable quarter over quarter, averaging approximately 197 basis points in Q4 2025 based on fixed-rate loans with seven to ten year terms. Boston-area commercial mortgage rates now start around 5.18%, a significant improvement from the peaks.
Lending volume tells an encouraging story. Capital flowing into commercial real estate lending rose approximately 35% year-over-year in 2025 as debt costs eased and lenders re-entered the market. Boston, as the largest CRE market in New England and one of the top 15 nationally, benefits from strong lender competition. Local institutions like Eastern Bank, Rockland Trust, and Brookline Bancorp compete alongside national banks, CMBS originators, and life insurance companies for quality Boston refinance business.
Property value appreciation in certain Boston asset classes creates refinancing opportunities even in a higher-rate environment. Multifamily properties in neighborhoods like the Seaport, South Boston, and Cambridge have appreciated meaningfully over the past five years, providing the equity cushion needed for cash-out refinances. Industrial properties near the Port of Boston and along the I-93 and I-495 corridors have seen similar gains.
What Types of Commercial Refinance Loans Are Available in Boston?
Boston property owners have access to multiple refinance structures, each designed for different goals and property profiles. Choosing the right program can mean the difference between saving tens of thousands annually and getting locked into unfavorable terms.
Conventional refinance loans from banks and credit unions are the most common option for stabilized Boston properties with strong net operating income. Rates currently start in the roughly 5.5% to 7.5% range depending on property type and borrower strength, with loan-to-value ratios up to 70% to 75% and terms from 5 to 25 years. These loans offer the most flexibility in negotiation and are typically the fastest to close. Boston's deep banking market, anchored by institutions with extensive local CRE portfolios, creates strong competition for conventional refinance business.
SBA 504 refinance loans are a powerful option for Boston business owners who occupy their commercial property. The SBA 504 program allows refinancing up to 90% of the property's appraised value with below-market fixed rates on the Certified Development Company portion. For a biotech company in Cambridge, a medical practice in Longwood, or a restaurant owner in the North End, this program can dramatically reduce monthly payments while providing working capital. Visit our SBA loan programs page for detailed eligibility criteria.
CMBS or conduit refinance loans are available for larger stabilized assets, typically $2 million and above. These loans offer non-recourse structures, meaning the borrower is not personally liable for the debt. Rates are competitive at approximately 5.5% to 7.0%, but the terms are fixed after closing with limited flexibility for modifications. CMBS refinancing is common for Boston office buildings, retail centers, and hotel properties in established locations.
DSCR refinance loans qualify borrowers based on the property's income rather than personal financials. If your Boston investment property generates strong rental income but your personal tax returns do not reflect high income (common for investors who take significant depreciation deductions), a DSCR loan may be the ideal refinance vehicle. Learn more about DSCR lending and how it works for Boston investors.
Cash-out refinance loans allow you to pull equity from your appreciated Boston property. If your building has increased in value since purchase, you can refinance for more than you currently owe and receive the difference as cash. This strategy is popular among Boston investors using equity from one property to fund acquisitions of new ones. LTV caps are lower on cash-out deals, typically 65% to 70%. Explore our refinance programs for a full comparison of options.
How Do Boston Refinance Rates Compare Across Property Types?
Refinance rates in Boston vary significantly by property type, reflecting the different risk profiles that lenders assign to each asset class. Understanding these rate tiers helps you set realistic expectations and negotiate more effectively.
Multifamily properties command the lowest refinance rates in Boston, starting around 5.18% for apartment buildings with five or more units. Boston's constrained housing supply, limited buildable land, and steady demand from the roughly 250,000 college and university students in the metro area give lenders confidence in apartment income stability. Fannie Mae, Freddie Mac, and HUD all offer competitive multifamily refinance programs that push rates lower than what traditional bank lenders offer.
Industrial and warehouse properties are the next tier, with rates typically ranging from approximately 5.50% to 6.75%. Boston's industrial market benefits from limited new supply (the metro has very little developable industrial land), the growing last-mile delivery economy, and proximity to the Port of Boston. Vacancy rates for industrial properties in Greater Boston remain among the tightest in the Northeast.
Lab and R&D space occupies a unique position in Boston's refinance market, with rates running approximately 5.75% to 7.00%. The life sciences sector has cooled somewhat from its 2021 to 2022 peak, with rising availability and moderating rents in Cambridge and the Seaport. However, Boston remains the undisputed national leader in lab space, and lenders with life sciences experience continue to offer competitive refinance terms for well-leased properties.
Retail properties, particularly those anchored by grocery or essential service tenants, fall in the roughly 6.00% to 7.25% range. Boston's walkable neighborhoods like Back Bay, the South End, and Brookline Village tend to secure better retail refinance terms than suburban strip centers. Newbury Street and Charles Street retail commands premium valuations that support favorable refinancing.
Office properties are the most challenging to refinance in the current Boston market. With the Greater Boston metro office vacancy rate reaching approximately 20% by mid-2025, lenders price office refinance loans at around 6.75% to 8.50% or higher. Class A office in Back Bay and the Financial District fares better than suburban office along Route 128, but borrowers should expect more conservative underwriting across the board.
Use our commercial mortgage calculator to model different rate scenarios for your Boston refinance, or try our DSCR calculator to check whether your property's income will qualify.
When Does It Make Financial Sense to Refinance in Boston?
Not every refinance saves money. Calculating the true cost and benefit of refinancing your Boston commercial property requires looking beyond the interest rate to consider closing costs, prepayment penalties, and your investment timeline.
The table above illustrates potential savings across different refinance scenarios on a $3 million Boston commercial loan. A rate reduction from 7.00% to 5.50% saves approximately $25,920 per year, while combining a rate reduction with a term extension can save over $98,000 annually in debt service. Given Boston's higher average loan sizes compared to many markets, the dollar impact of refinancing tends to be proportionally larger.
However, refinancing costs typically run 1% to 3% of the loan amount for origination fees, plus appraisal costs ($4,000 to $10,000 for Boston commercial properties, which tend to run higher than national averages due to market complexity), legal fees, title insurance, and environmental reports. On a $3 million refinance, total closing costs might range from $40,000 to $100,000.
Calculate your breakeven period by dividing total refinancing costs by monthly savings. If your closing costs are $60,000 and your monthly savings are $2,160, your breakeven point is approximately 28 months. If you plan to hold the property for longer than that, refinancing makes financial sense. If you intend to sell within two years, the math may not work in your favor.
Prepayment penalties on your existing loan can dramatically affect the economics. Yield maintenance, defeasance, and step-down penalties each work differently and can range from negligible to several hundred thousand dollars depending on how far you are from your loan's maturity date. On a $3 million Boston property loan, a 3% prepayment penalty equals $90,000, which could take years to recover through rate savings alone. Always request a payoff quote from your current lender before committing to a new refinance.
What Do Boston Lenders Require for Commercial Refinancing?
Boston commercial lenders evaluate refinance applications using several key metrics. Meeting or exceeding these benchmarks improves your chances of approval and unlocks better pricing.
The debt service coverage ratio is the most important qualification metric. Boston lenders typically require a minimum DSCR of 1.25x, meaning your property's net operating income must exceed the proposed annual debt service by at least 25%. Properties with DSCR above 1.40x typically receive the best rate pricing. If your Boston property's DSCR falls below 1.25x at current rates, you may need to pay down the loan balance, increase rents, or reduce expenses before refinancing.
Loan-to-value requirements differ based on the refinance type. Rate-and-term refinances in Boston can reach up to 75% LTV, while cash-out refinances typically cap at 65% to 70%. The property's current appraised value, not the original purchase price, determines the maximum loan amount. Given Boston's property value appreciation in neighborhoods like the Seaport and South Boston over recent years, many borrowers find they have more equity available than expected.
Credit score requirements for commercial refinancing in Boston generally start at 660 for conventional loans, with stronger scores unlocking better terms. Some DSCR and portfolio lender programs focus more on property performance than borrower credit, offering options for investors with lower scores.
Documentation requirements include the property's most recent two years of operating statements, current rent roll, copies of all tenant leases, borrower personal and business tax returns, a schedule of real estate owned, and proof of property insurance. Massachusetts also requires a 21E environmental assessment for many commercial transactions, which is the state-specific equivalent of a Phase I Environmental Site Assessment. Having these documents organized before applying can shorten the underwriting timeline significantly.
How Does the 2026 Maturity Wall Affect Boston Property Owners?
The looming maturity wall is not just a national story. It has specific implications for Boston commercial property owners that could create both urgency and opportunity.
Approximately $936 billion in commercial real estate loans are projected to mature nationally in 2026. Among the loans that matured before 2026 and still carry outstanding balances, especially in the office sector, delinquency rates have risen sharply. For Boston property owners, this means that waiting too long to address maturing debt can lead to increasingly unfavorable refinancing conditions as lenders become more selective.
The Boston office market is particularly exposed. With vacancy rates around 20% and property values declining an estimated 8% to 15% in some submarkets, office building owners may face a challenging refinancing environment. Lower appraised values mean reduced borrowing capacity, potentially creating a cash-in refinance situation where the borrower must bring additional equity to close the gap. Properties in the Financial District and along Route 128 have been most affected.
However, the maturity wall also creates opportunity. As some borrowers struggle to refinance, distressed properties and note sales may become available at attractive prices. Boston investors with strong balance sheets and access to capital can potentially acquire assets below replacement cost. Bridge loans can provide the short-term capital needed to acquire and stabilize these assets before placing permanent financing.
Multifamily and industrial property owners in Boston are in a much stronger position. Low vacancy rates, strong rent growth, and sustained investor demand mean that refinancing these asset classes is relatively straightforward. Borrowers holding multifamily properties in neighborhoods like Allston-Brighton, East Boston, and Somerville should have multiple competitive refinance offers to choose from.
For investors looking to capitalize on the maturity wall, our commercial bridge loan calculator can help model acquisition scenarios.
How Do You Choose Between a Bank and a CMBS Refinance in Boston?
The choice between a bank refinance and a CMBS (conduit) refinance depends on your property size, flexibility needs, and risk tolerance. Each option has distinct advantages and trade-offs for Boston borrowers.
Bank and credit union refinances offer the most flexibility for Boston property owners. Local and regional lenders like Eastern Bank, Rockland Trust, Brookline Bancorp, Cambridge Savings Bank, and numerous community banks provide relationship pricing, meaning your overall banking relationship can influence the rate and terms you receive. Banks can modify loan terms after closing if your situation changes, and they typically close faster with lower fees. For Boston refinance loans under $5 million, a bank is almost always the best starting point.
CMBS refinances suit larger stabilized assets where the borrower wants non-recourse protection. In a CMBS structure, the loan is packaged with other commercial mortgages and sold to bond investors. The borrower is generally not personally liable for the debt, which is a significant advantage for investors managing multiple properties across the Greater Boston market. However, CMBS loans are inflexible after closing, and property sales require a formal loan assumption process. For Boston office buildings, retail centers, and hotel properties valued at $2 million or more, CMBS refinancing often provides competitive rates with the added benefit of non-recourse protection.
Life insurance company lenders occupy a middle ground, offering low rates and long terms (often 10 to 30 years) with modest fees. These lenders favor high-quality assets in strong locations, making Class A properties in Back Bay, the Seaport, and Kendall Square ideal candidates. Boston's status as a top-tier institutional investment market means life company lenders are consistently active here. However, life companies are conservative underwriters with limited appetite for properties with vacancy or deferred maintenance.
Contact our team to get matched with the right refinance lender for your Boston property type and loan size.
What Are the Steps in the Boston Commercial Refinance Process?
The commercial refinance process in Boston follows a structured timeline that typically takes 45 to 90 days from application to closing. Understanding each step helps you prepare the right documentation and set realistic expectations.
The process starts with a property and loan assessment. Before contacting lenders, review your current loan terms, including the interest rate, remaining term, prepayment penalty structure, and balloon payment date. Calculate your property's current NOI and DSCR at today's rates. This self-assessment tells you whether refinancing makes financial sense and what type of program to pursue.
Lender shopping and pre-qualification come next. Submit your refinance package to at least three to four lenders to compare rates, fees, and terms. Boston's deep lending market means you have many options, from national banks to local credit unions to CMBS originators. Pre-qualification letters confirm the approximate loan amount and terms each lender can offer.
The appraisal and property inspection phase is often the longest step. The lender orders a commercial appraisal that reflects current Boston market values, comparable sales, and income capitalization analysis. For properties in rapidly appreciating neighborhoods like the Seaport or East Boston, the appraisal may reflect significant value gains. Massachusetts 21E environmental reports and property condition assessments may also be required, particularly for older buildings or properties with prior industrial use.
Underwriting involves a thorough review of property income, expenses, tenant quality, borrower financials, and Boston market conditions. The lender verifies that the property's income supports the proposed debt service and that the loan amount stays within LTV guidelines.
Closing and payoff complete the process. The new lender pays off your existing mortgage, and the new loan terms take effect immediately. Any cash-out proceeds are funded at closing. The entire process typically takes 45 to 60 days for bank refinances and 60 to 90 days for CMBS transactions.
How Does Boston's Property Value Landscape Affect Your Refinance Options?
Boston's diverse commercial real estate market has seen divergent property value trends across asset classes, creating very different refinancing dynamics depending on what type of property you own.
Multifamily property values in Boston have appreciated roughly 3% to 5% annually in recent years, driven by the city's constrained housing supply and steady demand from students, young professionals, and the biotech workforce. A multifamily property purchased for $4 million five years ago may now appraise for around $4.7 million to $5 million, providing the equity cushion needed for either a rate-and-term refinance at higher leverage or a cash-out refinance. Neighborhoods like South Boston, East Boston, and Allston-Brighton have seen particularly strong multifamily appreciation.
Industrial property values have posted even stronger gains at approximately 4% to 7% annually, reflecting extremely limited supply of industrial land in Greater Boston and growing demand from e-commerce logistics, cold storage, and lab-adjacent manufacturing. Owners of industrial assets along I-93, I-495, and near the Port of Boston are well-positioned for cash-out refinances to fund additional acquisitions.
Lab and R&D property values present a more nuanced picture. While Kendall Square and the Seaport remain globally significant life sciences markets, rising availability and moderating rents have tempered property valuations from their 2021 to 2022 peaks. Borrowers refinancing lab properties should prepare for appraisals that may reflect this normalization, particularly for newer buildings that were valued at peak-market pricing.
Office property values remain the weakest segment, declining an estimated 8% to 15% in many Boston submarkets due to elevated vacancy. Owners of office buildings, particularly suburban office along Route 128 and in some downtown locations, may find that their current property value no longer supports refinancing at the original loan amount. This can create a cash-in refinance situation where the borrower must bring additional equity to close the deal. Class A office in Back Bay and the Financial District has been more resilient than secondary locations.
Retail property values have grown modestly at roughly 2% to 4% annually, with the strongest performance in Boston's walkable neighborhoods. Newbury Street, Charles Street, Harvard Square, and neighborhood-serving retail in the South End and Brookline have maintained or increased values more consistently than suburban or auto-oriented retail.
For a broader view of Boston's commercial lending landscape, visit our Boston commercial loans hub.
What Boston-Specific Factors Should You Consider When Refinancing?
Boston's commercial real estate market has several characteristics that distinguish it from other major metros and can directly affect your refinancing strategy and outcomes.
The Massachusetts 21E environmental assessment is a state-specific requirement that many out-of-state borrowers are unfamiliar with. Under the Massachusetts Contingency Plan, most commercial property transactions trigger a need for environmental review. The 21E assessment goes beyond the federal Phase I Environmental Site Assessment in some respects, particularly regarding notification requirements for releases of hazardous materials. Budget $3,000 to $7,000 for a 21E assessment and allow two to four weeks for completion.
Boston's institutional investor base creates both competition and opportunity for refinancing. The city is home to major investment managers including Fidelity, State Street, and numerous pension fund advisors. This concentration of institutional capital means that high-quality Boston properties attract national and international lender interest, driving competitive refinance terms. However, institutional competition also means higher property values and, consequently, higher loan amounts that require larger equity positions.
Historic preservation requirements in neighborhoods like Back Bay, Beacon Hill, the South End, and the North End can affect property valuations and, by extension, refinance economics. If your property is subject to historic preservation restrictions that limit renovation or expansion options, the appraiser and lender will factor these constraints into their analysis. On the positive side, the Massachusetts Historic Rehabilitation Tax Credit provides a 20% state tax credit (in addition to the 20% federal credit) for qualifying rehabilitation of historic structures.
Seasonal market patterns in Boston can affect refinancing timing. The academic calendar creates predictable cycles in the rental market, with peak leasing activity from April through August. Refinancing a multifamily property during peak occupancy (September through May) provides the strongest rent roll and NOI figures for underwriting. Submitting a refinance application during a summer vacancy cycle could result in less favorable terms.
Explore hard money lending options as an alternative if traditional refinancing proves challenging for your Boston property situation.
What Mistakes Should You Avoid When Refinancing in Boston?
Commercial refinancing involves significant costs and commitments. Avoiding common mistakes can save you tens of thousands of dollars and prevent locking into unfavorable terms.
Ignoring prepayment penalties is the most costly mistake Boston borrowers make. Some commercial mortgages carry prepayment penalties that can exceed 5% of the loan balance, potentially wiping out years of interest savings from a lower rate. Always get a payoff quote with the exact penalty amount before committing to a refinance.
Focusing only on the interest rate while ignoring other costs leads to poor decisions. Origination fees, appraisal costs, legal fees, title insurance, and reserve requirements all add up. Boston's higher-than-average professional service costs mean that closing expenses can run 20% to 30% more than in less expensive markets. A loan with a slightly higher rate but lower fees may actually cost less over your holding period.
Not shopping multiple lenders is a missed opportunity in Boston's competitive lending market. Rate quotes can vary by 50 to 100 basis points between lenders for the same property. With dozens of banks, credit unions, CMBS originators, and private lenders active in Greater Boston, getting at least three to four quotes is essential.
Refinancing too early in your current loan term can trigger maximum prepayment penalties. If your loan has a 5-4-3-2-1 step-down penalty structure and you refinance in year one, you pay the full 5% penalty. Waiting until year three reduces the penalty to 3%, potentially saving you tens of thousands of dollars on a typical Boston commercial loan.
Overlooking SBA options is common among Boston business owners who own their commercial property. The SBA 504 refinance program can provide up to 90% LTV with below-market rates, but many borrowers default to conventional financing without exploring this option. If you occupy at least 51% of your building, an SBA 504 refinance should be on your comparison list.
Underestimating the 21E environmental assessment timeline catches many Boston borrowers off guard. If your refinance requires a new environmental assessment, start the process early to avoid delays that could jeopardize rate locks or closing deadlines.
Frequently Asked Questions About Commercial Refinancing in Boston
What is the minimum loan amount for a commercial refinance in Boston?
Most Boston commercial lenders have a minimum loan amount of $250,000 to $500,000 for refinancing. Some community banks and credit unions will consider smaller deals, while CMBS lenders typically require $2 million or more. SBA 504 refinance loans start at approximately $125,000 for the CDC portion. The ideal refinance size in Boston's market is $500,000 to $15 million, where you have the most lender competition and the best rate options. Boston's higher property values mean that average commercial refinance amounts tend to run larger than in many other metro areas.
How long does a commercial refinance take to close in Boston?
Bank and credit union refinances in Boston typically close in 45 to 60 days from application. CMBS refinances take longer at 60 to 90 days due to the securitization process. SBA 504 refinances can take 90 to 120 days because of the dual approval process involving both the bank and the Certified Development Company. Massachusetts-specific requirements like the 21E environmental assessment can add two to four weeks if not initiated early. Having a complete document package ready before applying, including two years of operating statements, current rent roll, and borrower financials, can shave two to three weeks off the timeline.
Can I refinance a Boston commercial property with high vacancy?
Refinancing with high vacancy is possible but more challenging, and this is a particularly relevant question given Boston's elevated office vacancy rates. Most conventional Boston lenders require at least 80% to 85% occupancy for commercial properties and 90% or higher for multifamily. If your property has significant vacancy, a bridge loan may be the better option, allowing you to stabilize occupancy before converting to permanent financing. Some portfolio lenders will consider the property's trailing 12-month income rather than current occupancy, which may help if vacancy is temporary.
What happens if my Boston property appraises for less than expected?
A lower-than-expected appraisal directly reduces your maximum loan amount because LTV is calculated against the appraised value. This risk is elevated for Boston office properties, which have seen value declines of 8% to 15% in some submarkets. If you need a specific loan amount to pay off your existing mortgage, a low appraisal can create a shortfall that requires additional cash at closing. Options include requesting an appraisal review if you believe comparables were inappropriate, shopping the loan to a different lender who may use a different appraiser, negotiating with your current lender for an extension while values recover, or contributing additional equity to meet the LTV requirement.
Is it better to lock a fixed rate or stay variable when refinancing in Boston?
The choice between fixed and variable rates depends on your investment timeline and risk tolerance. Fixed rates provide payment certainty and protection against future rate increases, making them ideal for long-term holds. Variable rates are typically 50 to 100 basis points lower initially and make sense if you plan to sell or refinance again within three to five years. Many Boston borrowers in 2026 are choosing shorter fixed-rate terms (5 to 7 years) with moderate prepayment penalties, positioning themselves to refinance again if rates continue to trend downward from their 2023 to 2024 peaks.
Do I need a Massachusetts 21E environmental assessment to refinance?
Most Boston commercial lenders require environmental due diligence for refinancing, and the Massachusetts 21E assessment is the state-specific standard. The 21E process evaluates potential environmental contamination and notification obligations under the Massachusetts Contingency Plan. If your property was previously used for industrial, automotive, dry cleaning, or other potentially contaminating purposes, a full 21E assessment is almost always mandatory. For newer properties in established commercial districts, some lenders accept a transaction screen or desktop review at lower cost. Budget $3,000 to $7,000 for a full 21E assessment and allow two to four weeks for completion.