Houston Commercial Refinance Loans: Rate & Term Options [2026 Guide]

Houston commercial property owners face a refinancing environment shaped by forces unique to the nation's fourth-largest city. The national maturity wall is sending over $930 billion in commercial mortgages to their due dates in 2026, and Houston carries roughly $1.5 billion in maturing commercial real estate debt. Energy sector consolidation has pushed office vacancy past 27%, while multifamily fundamentals are stabilizing after a historic supply wave. Industrial demand along the Ship Channel corridor keeps expanding with Port Houston's $1.9 billion channel expansion. And interest rates, though moderating from 2023 peaks, remain well above the levels at which most 2020-2022 vintage loans were originated.

This guide covers the full spectrum of refinance strategies for Houston commercial property owners: rate-and-term refinancing, cash-out programs, bridge-to-permanent transitions, maturity extensions, and sector-specific strategies for energy office, multifamily, and industrial assets. For a broader overview of national programs, visit our commercial refinance loans page.

Why Is the 2025-2026 Maturity Wall Hitting Houston So Hard?

The 2025-2026 maturity wall represents the largest concentration of commercial mortgage maturities in U.S. history. Nearly $1 trillion in loans matured in 2025, and another $930 billion is scheduled for 2026. Houston sits at a particularly acute pressure point because the city's commercial lending boom from 2020 to 2022 coincided with historically low interest rates, and those 3-year and 5-year term loans are now reaching their due dates in a fundamentally different rate environment.

Borrowers who locked in rates between 3.0% and 4.0% during the pandemic-era lending surge now face a refinancing market where rates start at 5.18% for the strongest credits and can exceed 7.5% depending on property type and leverage. The math is punishing. An owner with a $10 million interest-only loan originated at 3.5% paid $350,000 annually in interest. Refinancing that same balance at 6.5% pushes the annual cost to $650,000, an 86% increase in debt service that directly compresses cash flow and threatens debt service coverage ratios.

Houston's $1.5 billion in maturing debt is concentrated across three property types that each face distinct challenges. Office properties financed during the brief energy recovery of 2021-2022 are maturing into a market where vacancy has climbed to 27.4%. Multifamily loans originated during the pandemic rental boom are coming due after a historic supply wave added thousands of new units across Katy, Pearland, and the Inner Loop. And industrial properties along the Ship Channel and in the northwest submarket are maturing in a sector that, unlike office and multifamily, actually benefits from tighter financing conditions that slow new speculative construction.

In markets like Houston, sponsors are using cash-out refinances to acquire distressed assets from overleveraged competitors. The maturity wall is not just a challenge; for well-capitalized borrowers, it is creating acquisition opportunities that emerge when others cannot refinance.

What Are Current Commercial Refinance Rates in Houston?

As of early 2026, Texas commercial mortgage rates start as low as 5.18%, though actual pricing depends on property type, LTV, borrower strength, and loan structure. The 10-year Treasury yield near 4.50% and the 5-year Treasury at approximately 4.10% form the benchmark for most permanent commercial loans in the Houston market.

Here is how rates currently break down by loan type for Houston properties:

• Agency (Fannie Mae/Freddie Mac): 5.25% to 5.75% for qualifying multifamily properties with 5-10 year terms, up to 80% LTV
• CMBS: 5.50% to 6.50% for stabilized commercial properties at 60-75% LTV with 5-10 year terms
• Bank/Credit Union: 5.75% to 7.00% for relationship borrowers, typically 5-year terms with 25-year amortization
• Life Insurance Companies: 5.20% to 5.80% for low-leverage (under 60% LTV) Class A assets in prime Houston locations
• Debt Funds/Private Lenders: 7.50% to 11.00% for transitional, value-add, or higher-leverage refinancing
• HUD/FHA 223(f): 5.50% to 5.90% for multifamily refinance with up to 35-year fully amortizing terms
• SBA 504: 5.50% to 6.50% for owner-occupied commercial properties with up to 90% LTV

Houston borrowers benefit from Texas's business-friendly regulatory environment, the absence of a state income tax, and strong lender competition. Houston is one of the most active commercial lending markets in the South, with national banks, Texas-based regional banks, credit unions, and private lenders all competing for deals. Estimate your monthly payments using our commercial mortgage calculator to run scenarios across different rate levels and loan terms.

How Is the Energy Sector Reshaping Houston Office Refinancing?

Houston's office market tells the most complex refinancing story of any major U.S. metro. The city's overall office vacancy rate reached 27.9% in early 2025, trailing only San Francisco as the worst among major metropolitan areas. While availability has improved slightly to 26.2% by the third quarter of 2025, and the overall vacancy rate has edged down to 27.4%, the challenges run deep, particularly for properties tied to the energy sector.

More than $450 billion in oil and gas mergers and acquisitions since early 2023 has reshaped the corporate landscape in Houston. When companies merge, they consolidate office space. Energy-related companies account for 33% of upcoming lease expirations by square footage among major office-using industries from 2025 to 2031, totaling 18.5 million square feet. That is 18.5 million square feet of lease commitments that may not renew, creating a rolling vacancy problem that will weigh on office property values and refinancing for years.

For office property owners seeking to refinance, lenders are applying intense scrutiny to tenant rosters. Buildings with diversified tenancy across healthcare, legal, and professional services are faring better than those heavily weighted toward upstream energy. The bifurcation is sharp: Class A towers like Texas Tower, which secured a $450 million refinancing in 2025, demonstrate that premium assets with strong tenancy can still attract competitive capital. Meanwhile, Class B and C office buildings in the Energy Corridor, Westchase, and Greenspoint face LTV caps of 50-60% and rates 150-250 basis points above what multifamily or industrial properties command.

Sectors tied to upstream oil production, including oil and gas extraction, manufacturing, and administrative support services, are expected to contract in 2026 as oil prices are projected to fall. This means new drilling, revenues, and business expansion will slow, reducing demand for office space in areas that depend heavily on E&P activity. For owners of energy-sector office properties, this reinforces the case for acting on refinancing now rather than waiting for fundamentals to improve.

Despite the macro headwinds, there are encouraging signals. Houston's office market posted positive net absorption for two consecutive quarters in 2025, netting 992,959 square feet year to date and reversing a negative trend that had persisted since 2019. This suggests that the market may be finding a floor, even if a full recovery remains years away.

What Multifamily Refinance Opportunities Exist in Houston?

Houston's multifamily market presents the strongest refinancing story among the city's major property types. After absorbing a massive wave of new supply, fundamentals are stabilizing in ways that support refinancing for well-positioned properties.

The numbers show a market in transition. Houston's average multifamily cap rate held steady at 5.9% for three consecutive quarters through mid-2025, with institutional-quality Class A properties in prime urban submarkets like the Galleria and River Oaks trading at 4.9% to 5.3% cap rates. Occupancy improved to 89.0%, up 50 basis points from the prior quarter and 70 basis points year-over-year. Average rents sit at approximately $1,400, and Class A product accounted for 79.4% of overall absorption in the second quarter of 2025.

For multifamily owners refinancing in Houston, the lending landscape is favorable compared to other property types. Agency lenders (Fannie Mae and Freddie Mac) remain the dominant source of multifamily capital, offering rates between 5.25% and 5.75% with LTVs up to 80% and terms from 5 to 30 years. HUD/FHA 223(f) refinancing offers the lowest rates (5.50% to 5.90%) with fully amortizing terms up to 35 years, though the 6-12 month processing timeline makes it best suited for borrowers planning well ahead of maturity.

Houston topped the charts in Q3 2025 with 9% multifamily returns, driven by supply constraints starting to take hold as new deliveries slow and demographic demand continues. The metro added substantial population during and after the pandemic, and household formation trends support sustained rental demand across the Inner Loop, Katy, Sugar Land, and The Woodlands.

For multifamily owners whose properties have strong occupancy but whose 2020-2022 vintage loans are maturing, the current window offers a chance to lock in permanent financing at rates that, while higher than the original loans, remain within a range that supports positive cash flow. Owners who wait risk refinancing into a potentially more volatile market. Check whether your property's income supports the new debt service using our DSCR resources.

How Is Industrial Refinancing in the Ship Channel Area Performing?

Houston's industrial sector, particularly properties along the Ship Channel corridor and in the broader logistics network, represents the strongest refinancing opportunity in the local market. Vacancy remains tight, rent growth is positive, and institutional lender appetite for industrial collateral exceeds every other commercial property type.

The fundamentals are compelling. Since 2020, the Houston metro has added over 83 million square feet of warehouse space, with 13.17 million square feet still under construction heading into 2025. Despite this supply growth, absorption has kept pace thanks to Port Houston's expansion and the region's role as a logistics hub for the southern United States.

Port Houston's Project 11, a $1.9 billion, five-year expansion that will widen and deepen the Houston Ship Channel to accommodate larger cargo vessels, is driving demand for industrial and logistics space along the channel. The project's Segment 1B was completed in January 2025, and when fully complete, the expanded channel will increase cargo capacity at what is already the nation's busiest port for foreign waterborne tonnage. Industrial properties within 10 miles of the Ship Channel command premium valuations and attract the most favorable financing terms.

Only five large industrial tracts remain available along the Houston Ship Channel, creating scarcity that supports property values for existing owners. Companies in petrochemical processing, industrial services, and logistics are competing for the limited remaining sites, which translates into strong tenant demand and stable occupancy for refinancing purposes.

Industrial refinancing in Houston currently attracts rates 25-75 basis points below office properties of comparable quality. Life insurance companies and CMBS lenders are particularly active in the industrial sector, offering rates from 5.20% to 6.25% with LTVs up to 75%. Properties with long-term leases to credit tenants in the petrochemical supply chain or port logistics can access even more favorable terms.

For industrial property owners with loans maturing from the 2020-2022 vintage, the case for refinancing into permanent financing is strong. Property values have generally appreciated, occupancy remains high, and lender competition for industrial deals keeps terms favorable. If your industrial property needs interim financing before permanent placement, consider our bridge loan programs for a short-term solution.

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

Rate-and-term refinancing replaces your existing loan with a new one to secure a lower interest rate, extend the loan term, or convert from a floating rate to a fixed rate. The new loan amount roughly matches the outstanding balance. This strategy works best when rates have declined since origination or when a borrower needs to transition from a maturing bridge loan into permanent financing.

Cash-out refinancing allows you to borrow more than your current loan balance, extracting built-up equity as liquid capital. In Houston, cash-out programs typically allow up to 75% LTV on most commercial property types. Fannie Mae and Freddie Mac multifamily programs can reach 75-80% LTV, and SBA 504 loans allow up to 20% of the appraised value for cash-out on eligible owner-occupied properties.

Houston borrowers enjoy a significant structural advantage that owners in high-tax states do not: Texas has no state income tax and no city-level transfer tax equivalent to New York's mortgage recording tax or Los Angeles's Measure ULA. This means that refinancing in Houston avoids the substantial tax penalties that make refinancing in other major metros more expensive. Closing costs in Houston typically run 1.0% to 2.5% of the loan amount, compared to 2.5% to 4.0% in New York or Los Angeles.

In the current Houston market, sponsors are increasingly using cash-out refinances strategically. With $1.5 billion in maturing debt creating distress among overleveraged owners, well-capitalized borrowers are extracting equity from stabilized assets and deploying it to acquire distressed properties at discounts. This strategy is particularly active in the office sector, where properties trading at 40-60 cents on the dollar relative to 2019 valuations create compelling investment opportunities for buyers who can move quickly.

How Should Houston Borrowers Approach Loans Originated in 2020-2022?

The 2020-2022 lending vintage presents unique refinancing challenges because these loans were originated during a period of historically low interest rates and, in many cases, optimistic underwriting assumptions that have not materialized. Understanding the specific dynamics of this vintage helps Houston borrowers plan their refinancing strategy.

Loans originated in 2020-2021 benefited from rates as low as 2.5% to 3.5% and often featured aggressive LTVs based on pro forma projections. Many multifamily loans assumed rent growth of 5-8% annually, which did not account for the supply wave that added thousands of units across the Houston metro. Office loans originated during the brief energy recovery assumed occupancy improvements that were derailed by subsequent M&A consolidation.

For these borrowers, the gap between the original loan terms and current market conditions creates several challenges. First, lower-than-expected property values may result in LTV ratios above what current lenders will accept, requiring equity contributions or mezzanine financing to bridge the gap. Second, higher interest rates mean that even if the property has performed reasonably well operationally, the debt service coverage ratio may fall below lender minimums at current rates. Third, properties that were underwritten on a value-add basis but have not completed their business plan face the most acute refinancing pressure.

Not every maturing loan requires a full refinance. Loan modifications and maturity extensions offer alternatives for borrowers who need more time. Many Houston-based banks have been granting 1-3 year extensions rather than forcing distressed outcomes, particularly on office and retail properties. Extension fees typically run 0.25% to 1.00% of the outstanding balance, and lenders may require partial paydowns of 5-10% as a condition of extending.

For borrowers whose properties cannot qualify for conventional refinancing at current values and rates, bridge loans provide interim capital at higher rates (7.5% to 11.0%) while the borrower executes a stabilization plan. Bridge lenders are active in Houston across all property types, with particular focus on multifamily value-add and office repositioning opportunities.

What Loan Programs Work Best for Different Houston Property Types?

The ideal refinancing program depends on property type, condition, submarket location, and borrower objectives. Here is how different Houston asset classes typically match to loan programs.

Multifamily (5+ units): Agency loans through Fannie Mae and Freddie Mac offer the most competitive rates and terms, with 5-30 year fixed-rate options and up to 80% LTV. Houston's stabilizing rental market and strong population growth make multifamily the easiest asset class to refinance. HUD/FHA 223(f) provides 35-year terms at the lowest rates but involves a longer timeline.

Office: Houston's most challenged asset class. Class A towers in the Central Business District and Galleria area with diversified tenancy can still attract competitive financing. Class B and C buildings in the Energy Corridor, Westchase, and Greenspoint face significantly tighter conditions, with LTVs capped at 50-60% and rate premiums of 150-250 basis points above multifamily.

Industrial/Warehouse: The most favorable financing terms in the Houston market. Low vacancy, strong rent growth, and port-driven demand attract competitive offers from life companies, CMBS, and banks. Properties near the Ship Channel, along the I-10 East corridor, and in the northwest submarket command premium terms.

Retail: Grocery-anchored and necessity retail in high-traffic Houston corridors finance relatively well. Power centers and single-tenant retail require strong lease term remaining and tenant credit. Avoid assumptions about pre-pandemic foot traffic; lenders underwrite to trailing-12-month actuals.

Medical Office: Houston's Texas Medical Center, the largest medical complex in the world, supports a robust medical office market. Medical office properties with long-term healthcare system tenants access rates comparable to industrial and often better than general office.

Ready to refinance your Houston commercial property? Contact our team for a no-obligation quote tailored to your property type and situation.

How Should Houston Borrowers Prepare for a Commercial Refinance?

Successful refinancing requires preparation that starts 12-18 months before maturity. Here is a practical timeline for Houston commercial property owners.

18 months before maturity: Order a preliminary property valuation and review your current loan documents for prepayment provisions. Begin assembling updated financials, including trailing-12-month operating statements, rent rolls, and capital expenditure history. For properties in the energy corridor, document tenant diversification efforts and lease renewal progress.

12 months before maturity: Engage a commercial mortgage broker or begin direct lender outreach. Houston's deep lender market means you should target 4-6 quotes minimum to ensure competitive pricing. For properties with strong DSCR ratios, this lead time allows you to shop multiple lenders and secure optimal terms.

6-9 months before maturity: Lock your rate, complete the application, and begin the appraisal and environmental review process. Houston properties typically require Phase I environmental assessments (particularly important for properties near petrochemical facilities or the Ship Channel), updated ALTA surveys, and flood zone determinations.

3 months before maturity: Finalize legal review, complete title work, and coordinate closing. Texas closing costs are generally lower than coastal markets, but budget for title insurance, environmental review, and lender fees.

Houston-specific closing costs to budget for:

• Title insurance: 0.25% to 0.50% of loan amount
• Appraisal and environmental: $4,000 to $20,000 depending on property size and complexity
• Legal fees: $10,000 to $30,000 for borrower's counsel
• Lender origination fee: 0.50% to 1.50% of loan amount
• Flood determination/elevation certificate: $500 to $3,000 (critical in Houston's flood-prone areas)
• Phase I Environmental: $2,500 to $6,000 (Phase II if warranted: $10,000 to $50,000 for Ship Channel properties)
• Insurance reserves: 3-12 months of premiums escrowed at closing

Budget 1.0% to 2.5% of the total loan amount for closing costs on a standard Houston commercial refinance.

What Are the Most Common Mistakes in Houston Commercial Refinancing?

Borrowers in the current market frequently make avoidable errors that cost them money or delay their refinance. Watch out for these common pitfalls.

1. Underestimating flood insurance requirements. Houston's flood history means that many commercial properties fall within FEMA flood zones requiring mandatory flood insurance. Premiums have increased significantly since Hurricane Harvey, and lenders require coverage as a closing condition. Budget for this early.

2. Waiting too long to start. Beginning the refinance process 3 months before maturity limits your options and eliminates negotiating leverage. Start at 12-18 months, especially for office properties that require more extensive lender due diligence.

3. Not shopping multiple lenders. Rate quotes on the same Houston property can vary by 75-150 basis points across lenders. The city's competitive lending market rewards borrowers who obtain 4-6 quotes.

4. Ignoring environmental risk near industrial zones. Properties near the Ship Channel, petrochemical facilities, or former industrial sites may trigger Phase II environmental assessments that add $10,000 to $50,000 and 30-60 days to the closing timeline. Know your environmental profile before starting the process.

5. Overestimating office property values. Houston's 27% office vacancy rate means that appraisals for office properties are coming in well below expectations for many borrowers. Order a pre-appraisal valuation 12-18 months before maturity to understand your true LTV position.

6. Failing to document energy tenant diversification. Lenders are acutely aware of Houston's energy sector concentration risk. Properties with heavy energy tenancy should document diversification efforts, lease renewals with non-energy tenants, and any steps taken to reduce single-sector exposure.

How Can Houston Property Owners Take Advantage of Current Market Conditions?

Despite the challenges, the current market offers genuine opportunities for well-positioned Houston borrowers. Property owners with strong occupancy, growing NOI, and moderate leverage can access competitive rates, particularly in the multifamily and industrial sectors.

Houston's economy continues to diversify beyond energy. Job growth is forecast to continue through 2026 across healthcare, technology, aerospace, and logistics. The Texas Medical Center's ongoing expansion, NASA's Artemis program activity at Johnson Space Center, and the Port of Houston's infrastructure investments are creating demand drivers that support commercial real estate values independent of oil prices.

For properties facing valuation challenges, creative capital structures can bridge the gap. Preferred equity, mezzanine debt, and C-PACE (Commercial Property Assessed Clean Energy) financing can supplement a smaller first mortgage. C-PACE is particularly relevant for Houston properties needing energy efficiency upgrades, hurricane hardening, or flood mitigation improvements, as these loans are repaid through the property tax bill with terms up to 30 years.

The combination of no state income tax, no city transfer tax, competitive closing costs, and strong lender competition makes Houston one of the most favorable metros in the country for commercial refinancing from a cost perspective. Owners who act proactively, starting 12-18 months before maturity and shopping multiple lenders, will secure the best outcomes.

Need help navigating your Houston commercial refinance? Our team works with borrowers across the entire Houston metro on refinancing for every property type. Get started with a free consultation and let us match you with the right lending program.

Frequently Asked Questions

What is the minimum DSCR required for a commercial refinance in Houston?

Most lenders require a minimum debt service coverage ratio (DSCR) of 1.20x to 1.25x for stabilized commercial properties in Houston. Agency multifamily lenders may accept 1.15x to 1.20x for strong properties in high-demand submarkets like the Inner Loop, Galleria area, or The Woodlands. Office properties face stricter requirements, often 1.30x to 1.50x, reflecting the higher vacancy risk. Industrial properties with long-term credit tenants may qualify at 1.20x. You can evaluate your property's debt coverage using our DSCR resources.

How does Houston's flood risk affect commercial refinancing?

Flood risk is a significant factor in Houston commercial refinancing. Properties in FEMA-designated Special Flood Hazard Areas require mandatory flood insurance, and premiums have increased substantially since Hurricane Harvey. Lenders also scrutinize flood mitigation improvements, drainage infrastructure, and elevation certificates. Properties that have been flood-proofed or are located in areas that benefited from the Harris County Flood Control District's $2.5 billion bond program may receive more favorable underwriting treatment. Budget flood insurance costs into your pro forma early in the process.

Can I refinance a Houston office building with high vacancy?

Yes, but options narrow significantly above 25-30% vacancy. Conventional lenders typically want to see 80%+ occupancy and 1.25x+ DSCR. For higher-vacancy office properties, bridge lenders and debt funds offer transitional financing at 7.5% to 11.0% with 1-3 year terms while you execute a leasing or repositioning strategy. Some borrowers are converting underperforming office to other uses, such as medical office, coworking, or even residential, and securing financing based on the repositioning plan rather than current office income.

How long does a commercial refinance take in Houston?

Timelines vary by loan type. Bank loans typically close in 45-60 days. CMBS loans require 60-90 days. Agency loans (Fannie Mae/Freddie Mac) close in 45-75 days. HUD/FHA 223(f) loans take 6-12 months. Bridge loans from private lenders can close in 2-4 weeks for urgent situations. Environmental review for properties near the Ship Channel or industrial zones may add 30-60 days if a Phase II assessment is triggered.

What are the advantages of refinancing in Texas versus selling?

Texas offers several structural advantages for refinancing over selling. There is no state income tax on capital gains, which reduces the sell-side advantage compared to states with capital gains taxes. There is no city or county transfer tax equivalent to those in New York or Los Angeles, keeping transaction costs lower on both sides. However, Texas property taxes are among the highest in the nation (averaging 1.8% to 2.2% of assessed value in Harris County), which means refinancing and holding requires factoring in ongoing property tax obligations. For cash-out refinancing, the absence of transfer taxes means extracted equity is not reduced by sales-related taxes.

Is now a good time to refinance commercial property in Houston?

For borrowers with loans maturing in 2026-2027, waiting carries risk. While rates have stabilized from their 2023 peaks, they remain above historical norms, and the Federal Reserve's rate path is uncertain. The current window offers reasonable rates (5.18%+ for strong credits), active lender competition in the Houston market, and sufficient liquidity for most property types except distressed office. Borrowers with multifamily and industrial properties are in the strongest position. Office property owners with improving tenancy should act before further energy sector headwinds materialize. Contact our team to discuss timing specific to your property and loan situation.