Detroit property owners face a defining moment in commercial real estate financing. With over $936 billion in commercial real estate loans maturing nationally in 2026 and Michigan commercial mortgage rates starting as low as 5.11%, the decision of when and how to refinance your Detroit property could save or cost you hundreds of thousands of dollars over the life of the loan.
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 Detroit market.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
Why Are So Many Detroit Property Owners Refinancing Right Now?
The commercial real estate refinancing landscape in Detroit 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 S&P Global Market Intelligence, approximately $936 billion in commercial real estate loans are projected 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 Detroit property owners holding maturing debt need a clear refinance strategy.
The rate environment presents both a challenge and an opportunity. Between 2024 and 2026, more than $1.5 trillion in commercial real estate loans are set to mature. The average interest rate on new commercial real estate loans has been around 6.24%, compared to the 4.76% average on older debt coming due. For Detroit borrowers who locked in historically low rates during 2020 to 2022, refinancing at today's rates will increase debt service. However, rates have trended downward from their 2023 peaks, and many Detroit lenders are competing aggressively for quality refinance business.
Property value appreciation in key Detroit submarkets creates refinancing opportunities even in a higher-rate environment. Multifamily values have appreciated approximately 3% to 5% annually across the metro. Industrial properties have seen even stronger growth at 4% to 6% annually, reflecting metro Detroit's deep automotive supply chain and logistics infrastructure. A multifamily property purchased in Midtown five years ago may have appreciated enough to support a cash-out refinance at attractive terms, even with modestly higher interest rates.
Detroit's broader economic revival strengthens lender confidence. Bedrock has invested more than $7.5 billion in downtown Detroit since 2011. The $1.4 billion Hudson's Detroit development has attracted GM, JPMorgan Chase, and Accenture as tenants. The $377 million Mid Project is under construction in Midtown. These institutional commitments signal to lenders that Detroit's market trajectory supports long-term mortgage commitments.
What Types of Commercial Refinance Loans Are Available in Detroit?
Detroit 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 thousands annually and getting stuck with unfavorable terms.
Conventional refinance loans from banks and credit unions are the most common option for stabilized Detroit properties with strong net operating income. Rates currently start in the 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. Local lenders like Flagstar Bank, Comerica, and Old National offer competitive terms with the advantage of understanding Detroit's market nuances. These loans offer the most flexibility in negotiation and are typically the fastest to close.
Agency refinance loans through Fannie Mae and Freddie Mac provide the most competitive terms for Detroit multifamily properties with five or more units. Non-recourse structures, rates starting around 5.5% to 6.5%, leverage up to 80%, and amortization periods up to 30 years make agency loans the gold standard for apartment refinancing. HUD/FHA multifamily loans offer even longer terms (35 years, fully amortizing) at rates starting around 5.64% for Detroit properties, though the longer closing timeline of 90 to 180 days requires advance planning.
SBA 504 refinance loans are a powerful option for Detroit 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 manufacturer along the I-94 corridor, a medical practice in New Center, or a restaurant in Corktown, this program can dramatically reduce monthly payments while providing working capital. Visit our SBA loan programs page for detailed eligibility criteria.
DSCR refinance loans qualify borrowers based on the property's income rather than personal financials. If your Detroit 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 Detroit investors.
Cash-out refinance loans allow you to pull equity from your appreciated Detroit 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 Detroit investors using equity from one property to fund acquisitions of additional properties in the metro's improving submarkets. LTV caps are lower on cash-out deals, typically 65% to 70%. Explore our refinance programs for a full comparison of options.
Bridge-to-permanent refinancing converts short-term debt into long-term financing. For Detroit investors who used bridge loans to acquire and stabilize properties during the initial value-add phase, converting to permanent debt locks in fixed rates and reduces monthly payments once the property reaches stabilized occupancy.
How Do Detroit Refinance Rates Compare Across Property Types?
Refinance rates in Detroit 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 Detroit, with rates starting around 5.64% for HUD loans and ranging to approximately 6.5% for conventional apartment financing. The strong demand for rental housing in Detroit, supported by metro-wide occupancy of approximately 94.8% and steady annual rent growth of 2.2%, gives 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. Midtown, Downtown, and Corktown multifamily properties attract the strongest lender interest.
Industrial and warehouse properties are the next tier, with rates typically ranging from 6.0% to 7.0%. Metro Detroit's industrial market benefits from its deep ties to the automotive supply chain, with more than 500 million square feet of industrial space across the region. Despite the vacancy rate increasing to approximately 4.9% in Q3 2025, this remains well below the national average and reflects a market working through post-pandemic supply additions rather than structural weakness. Properties along the I-94, I-75, and I-96 corridors with creditworthy automotive or logistics tenants receive the most competitive refinance terms.
Retail properties fall in the 6.5% to 7.5% range for well-located Detroit assets. Ground-floor retail in walkable neighborhoods like Midtown, Eastern Market, and the Woodward Avenue corridor secures better pricing than suburban strip retail. Anchored retail centers with grocery or essential service tenants also receive favorable treatment from lenders.
Mixed-use properties in Detroit's urban core attract rates of 6.5% to 8.0%, depending on the component mix. Properties with a higher percentage of residential income receive better pricing. Visit our Detroit mixed-use loans guide for detailed information on mixed-use refinancing.
Office properties are the most challenging to refinance in the current Detroit market. With the CBD office vacancy rate at approximately 21.3% and metro-wide vacancy at 22.9%, lenders price office refinance loans at 7.0% to 8.5% or higher. Class A office anchored by investment-grade tenants like GM or Rocket Mortgage fares significantly better than Class B and C properties. Borrowers with older office buildings should expect more conservative underwriting, including lower LTV caps (60% to 65%), higher DSCR requirements (1.35x or above), and potentially personal recourse guarantees.
Use our commercial mortgage calculator to model different rate scenarios for your Detroit refinance, or try our DSCR calculator to check whether your property's income will qualify.
When Does It Make Financial Sense to Refinance in Detroit?
Not every refinance saves money. Calculating the true cost and benefit of refinancing your Detroit 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 $2 million Detroit commercial loan. A rate reduction from 7.00% to 5.50% saves approximately $17,280 per year, while combining a rate reduction with a term extension can save over $65,000 annually in debt service.
However, refinancing costs typically run 1% to 3% of the loan amount for origination fees, plus appraisal costs ($3,000 to $8,000 for commercial properties), legal fees, title insurance, and environmental reports. On a $2 million refinance, total closing costs might range from $25,000 to $70,000.
Calculate your breakeven period by dividing total refinancing costs by monthly savings. If your closing costs are $40,000 and your monthly savings are $1,440, your breakeven point is approximately 28 months. If you plan to hold the property for longer than that, refinancing makes 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. Always request a payoff quote from your current lender before committing to a new refinance.
What Do Detroit Lenders Require for Commercial Refinancing?
Detroit 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. Detroit 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 Detroit 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 Detroit 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 Detroit's property value appreciation in key submarkets, many borrowers find they have more equity available than expected, particularly in Midtown, Downtown, and along the industrial corridors.
Credit score requirements for commercial refinancing in Detroit 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. Having these documents organized before applying can shorten the underwriting timeline significantly.
How Do You Choose Between a Bank and an Agency Refinance in Detroit?
The choice between a bank refinance and an agency (Fannie Mae/Freddie Mac) refinance depends on your property type, loan size, and flexibility needs. Each option has distinct advantages and trade-offs for Detroit borrowers.
Bank and credit union refinances offer the most flexibility for Detroit property owners. Local and regional lenders like Flagstar Bank, Comerica, Old National, and numerous community banks and credit unions 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 Detroit refinance loans under $5 million across all property types, a bank is almost always a strong starting point.
Agency refinances through Fannie Mae and Freddie Mac are the gold standard for Detroit multifamily properties. These programs offer non-recourse structures, the highest leverage (up to 80% LTV), the longest amortization (up to 30 years), and the most competitive rates (starting around 5.5%). For stabilized apartment buildings with five or more units in neighborhoods like Midtown, Downtown, Southwest Detroit, or Grandmont-Rosedale, agency financing typically outperforms bank options on rate, leverage, and non-recourse protection. However, agency loans have less flexibility after closing and require formal processes for assumptions or modifications.
HUD/FHA multifamily loans offer the longest terms (35 years, fully amortizing) and rates starting at approximately 5.64% for Detroit properties. The trade-off is closing timelines of 90 to 180 days and more extensive documentation requirements. For larger apartment complexes where the borrower plans to hold for a decade or more, HUD financing provides unmatched long-term stability.
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 Downtown Detroit, Midtown, and Troy ideal candidates.
Contact our team to get matched with the right refinance lender for your Detroit property type and loan size.
How Is Detroit's Property Value Growth Affecting Refinance Options?
Detroit's economic revival has driven property value appreciation across most asset classes, creating refinancing opportunities that may not exist in slower-growth markets. Understanding these trends by property type helps you evaluate your refinance potential.
Multifamily property values in Detroit have appreciated approximately 3% to 5% annually in recent years, driven by the metro's occupancy rate of approximately 94.8% and steady rent growth. The declining delivery pipeline (approximately 2,500 units in 2022, 2,000 in 2023, and 1,500 in 2024) sets the stage for stronger rent growth in 2026 and 2027, which should further support multifamily valuations. A multifamily property purchased for $2 million in Midtown five years ago may now appraise for $2.3 million to $2.5 million, providing significant equity for either a rate-and-term refinance at higher leverage or a cash-out refinance.
Industrial property values have seen steady growth at approximately 4% to 6% annually, reflecting metro Detroit's position as the largest industrial market in the Midwest with more than 500 million square feet of space. Properties along the I-94, I-75, and I-96 corridors with modern specifications (28-foot clear heights and dock-high loading) have performed best. Despite the recent uptick in industrial vacancy to approximately 4.9%, cap rates remain compressed in the 4.84% to 6.71% range depending on property class, supporting strong refinance valuations.
Office property values remain the weakest segment in Detroit, declining roughly 5% to 12% depending on building class and location. The CBD vacancy rate of approximately 21.3% and metro-wide rate of 22.9% continue to pressure valuations. Owners of Class B and C office buildings may find that their current property value no longer supports refinancing at the original loan amount, creating a cash-in refinance situation where the borrower must bring additional equity. Class A office anchored by investment-grade tenants like GM at Hudson's Detroit has been more resilient, but even trophy office properties face valuation headwinds.
Retail property values have grown modestly at approximately 1% to 3% annually, with the strongest performance in walkable Detroit neighborhoods like Midtown, Eastern Market, and the Woodward Avenue corridor. Properties with essential service tenants have maintained or increased values more consistently than discretionary retail.
What Are the Steps in the Detroit Commercial Refinance Process?
The commercial refinance process in Detroit 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. Detroit's lending market includes national banks, regional institutions like Flagstar and Comerica, community banks and credit unions, agency lenders (for multifamily), and private debt funds. 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 Detroit market values, comparable sales, and income capitalization analysis. For properties in rapidly revitalizing neighborhoods like Corktown or Eastern Market, the appraisal may reflect significant value gains over the past several years. Environmental reports (Phase I ESA) and property condition assessments may also be required, particularly for older buildings or former industrial sites.
Underwriting involves a thorough review of property income, expenses, tenant quality, borrower financials, and Detroit 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 agency transactions.
Which Detroit Submarkets Offer the Strongest Refinance Potential?
Not all Detroit properties refinance equally. The submarket your property sits in significantly influences both the appraised value and the lender appetite for your refinance request.
Midtown leads Detroit in refinance attractiveness for multifamily and mixed-use properties. The neighborhood's 95%+ occupancy rates, proximity to Wayne State University and the Detroit Medical Center, and the development activity from projects like The Mid and Brush Watson provide strong appraisal support. Lenders actively compete for Midtown refinance business.
Downtown Detroit offers strong refinance potential for well-positioned assets, though the bifurcation between Class A and lower-class office properties creates a wide range of outcomes. Multifamily, mixed-use, and retail properties in the downtown core supported by Bedrock's investment halo receive favorable lender treatment. Office properties require major tenants with long-term lease commitments to attract competitive refinance terms.
Corktown is an emerging refinance story. Ford's Michigan Central Station campus, the incoming stadium complex, and the Michigan Avenue corridor rebuild are creating a rapid appreciation environment. Properties purchased three to five years ago before these catalysts materialized may show significant equity gains that support cash-out refinancing.
The Industrial Corridors along I-94, I-75, and I-96 provide consistent refinance opportunities for warehouse and manufacturing properties. Detroit's automotive supply chain infrastructure creates a structural demand floor that lenders recognize, even during periods of cyclical softening.
Dearborn benefits from Ford Motor Company's employment anchor, providing stability for industrial, retail, and mixed-use refinances. The restructuring of Ford's EV operations, including the redeployment of the Rouge plant for hybrid and gas-powered truck production, is stabilizing the local employment picture and supporting property values.
Troy is the premier suburban office and retail refinance market in metro Detroit, with stronger occupancy and rent fundamentals than most suburban submarkets. Troy's corporate headquarters concentration and established retail corridors command competitive refinance terms from both local and national lenders.
What Mistakes Should You Avoid When Refinancing in Detroit?
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 Detroit 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 bad decisions. Origination fees, appraisal costs, legal fees, title insurance, environmental assessment costs, and reserve requirements all add up. 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 Detroit's lending market. Rate quotes can vary by 50 to 100 basis points between lenders for the same property. With dozens of banks, credit unions, agency lenders, and private lenders active in the Detroit market, 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.
Overlooking SBA options is common among Detroit 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.
Neglecting environmental requirements can delay or derail a Detroit refinance. Many lenders require updated Phase I Environmental Site Assessments, and for properties with prior industrial use, environmental clearance can add weeks to the closing timeline. Order your Phase I early in the process to avoid last-minute delays.
Frequently Asked Questions About Commercial Refinancing in Detroit
What is the minimum loan amount for a commercial refinance in Detroit?
Most Detroit 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 agency lenders (Fannie Mae, Freddie Mac) typically require $1 million or more. SBA 504 refinance loans start at approximately $125,000 for the CDC portion. The ideal refinance size in Detroit's market is $500,000 to $10 million, where you have the most lender competition and the best rate options.
How long does a commercial refinance take to close in Detroit?
Bank and credit union refinances in Detroit typically close in 45 to 60 days from application. Agency refinances (Fannie Mae, Freddie Mac) take 45 to 90 days. SBA 504 refinances can take 90 to 120 days because of the dual approval process. HUD/FHA multifamily refinances have the longest timelines at 90 to 180 days. Having a complete document package ready before applying, including two years of operating statements, current rent roll, environmental reports, and borrower financials, can shave two to three weeks off the timeline.
Can I refinance a Detroit commercial property with high vacancy?
Refinancing with high vacancy is possible but more challenging. Most conventional Detroit 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 Detroit 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. If you need a specific loan amount to pay off your existing mortgage, a low appraisal can create a shortfall that requires you to bring additional cash to 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. This risk is particularly relevant for Detroit office properties, where declining values may not support the existing loan balance.
Is it better to lock a fixed rate or stay variable when refinancing in Detroit?
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 Detroit borrowers in 2026 are choosing shorter fixed-rate terms (5 to 7 years) with moderate prepayment penalties, positioning themselves to refinance again when rates potentially move lower.
Do I need a new environmental assessment to refinance my Detroit property?
Most Detroit lenders require a Phase I Environmental Site Assessment for refinancing, particularly if the existing report is more than six months to one year old. Given Detroit's industrial heritage, Phase I assessments are almost always mandatory for properties in or near the industrial corridors, former manufacturing zones, and older commercial districts. If your property was previously used for automotive, manufacturing, or dry cleaning purposes, a Phase I is required without exception. Budget $2,500 to $5,000 for a new Phase I ESA and allow two to three weeks for completion. Phase II assessments (soil and groundwater testing) may add $10,000 to $50,000 and several additional weeks if the Phase I identifies concerns.
Positioning Your Detroit Refinance for Success
Detroit's commercial real estate market offers a refinancing landscape shaped by improving fundamentals, institutional investment momentum, and a lending community that is increasingly confident in the Motor City's trajectory. The convergence of the national maturity wall with Detroit's property value appreciation creates a window where well-prepared borrowers can access competitive terms from lenders actively competing for quality refinance business.
Whether you are refinancing a stabilized apartment complex in Midtown, pulling equity from an appreciated industrial facility along I-94, or restructuring debt on a mixed-use property in Corktown, the key to favorable terms is matching your property and financial profile with the right lending program and presenting a complete, well-documented application.
Contact Clearhouse Lending to discuss your Detroit commercial refinance requirements and explore financing options from lenders who understand the Motor City's unique market dynamics.