Commercial property refinancing represents one of the most important financial decisions Saint Paul property owners face, and the 2026 lending environment creates particularly favorable conditions. With approximately $936 billion in commercial mortgages maturing nationally, interest rates stabilizing from their 2023-2024 peaks, and lender competition intensifying, Saint Paul property owners have a compelling opportunity to reduce borrowing costs, extract equity for reinvestment, or restructure their debt for the next cycle.
This guide covers everything you need to know about refinancing commercial properties in Saint Paul, from available programs and current rates to cash-out strategies, prepayment considerations, and property-specific refinancing approaches.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
Why Should Saint Paul Property Owners Consider Refinancing in 2026?
Several converging market conditions make 2026 an attractive refinancing window for Saint Paul commercial property owners.
Interest rates have stabilized from their 2023-2024 peaks. The prime rate settled at 6.75% as of December 2025, down from highs above 8%. Agency multifamily rates have declined to approximately 5.30%, and conventional commercial mortgage rates range from 5.50% to 7.25%. Property owners who financed or refinanced during the rate peak period may be paying 100 to 200 basis points above current market rates, creating meaningful savings opportunities.
Property values in Saint Paul have recovered from the uncertainty of 2022-2023. The Highland Bridge development, Midway district transformation, and Lowertown renaissance have driven appreciation in key submarkets. Multifamily, industrial, and neighborhood retail properties have seen the strongest value recovery, creating equity that owners can access through cash-out refinancing.
The maturity wave is creating lender competition. With $936 billion in commercial mortgages maturing nationally in 2026, lenders are competing aggressively for refinancing business. This competition benefits borrowers through lower spreads, more flexible terms, and faster processing. Saint Paul's strong market fundamentals, including government employment stability, Fortune 500 corporate anchors, and active development, make it an attractive market for lenders.
Loan originations are surging. Commercial loan originations rose 36% year-over-year in Q3 2025, reflecting improved borrower-lender alignment on property values and terms. Alternative lenders, including debt funds and mortgage REITs, captured 37% of non-agency closings in 2025, giving Saint Paul borrowers more options beyond traditional banks.
What Refinance Programs Are Available for Saint Paul Commercial Properties?
Saint Paul property owners have access to a comprehensive range of refinancing programs, each suited to different property types, ownership situations, and financial objectives.
Agency refinancing (Fannie Mae/Freddie Mac) offers the most competitive terms for multifamily properties with five or more units. Rates start around 5.30% for seven to ten year fixed terms, with LTV up to 80% for rate-and-term refinances and 75% for cash-out. Amortization extends to 25 to 30 years, producing the lowest possible monthly payments. Agency refinances are available for stabilized multifamily buildings with 90% or more occupancy and a DSCR of 1.25x or higher. For Saint Paul apartment owners in Highland Park, Lowertown, Mac-Groveland, and Midway, agency refinancing delivers the lowest cost of capital.
Conventional bank refinancing serves all stabilized property types, including industrial, retail, office, and mixed-use. Minnesota banks including U.S. Bank, Bremer Bank, Bridgewater Bank, and Old National offer rates between 5.50% and 7.25%, LTV up to 75%, and 5 to 10 year terms. Conventional refinancing is the primary option for non-multifamily properties and provides the most flexibility in structuring. Local banking relationships can result in more favorable terms, and Minnesota banks often have particular expertise in underwriting Twin Cities properties.
CMBS conduit refinancing provides non-recourse permanent financing for stabilized properties valued at $2 million or more. Rates range from 5.80% to 7.50% with 10 year terms and 30 year amortization. CMBS refinancing works well for investors who want non-recourse protection and are willing to accept the structured prepayment provisions (typically yield maintenance or defeasance). CMBS lenders are active in Saint Paul for well-tenanted retail, industrial, and multifamily properties.
SBA 504 refinancing serves owner-occupants refinancing commercial properties they occupy. The program allows refinancing of existing debt with down payments as low as 10% and rates between 5.50% and 7.00% on the CDC portion. SBA refinancing is available for properties where the borrower occupies at least 51% of the space. Cash-out is limited under SBA guidelines but the program can provide significant payment savings compared to conventional financing.
DSCR refinancing serves investors refinancing without income documentation. Rates range from 7.00% to 9.50% with LTV up to 80% for rate-and-term and 75% for cash-out. DSCR refinancing is available for all investment property types and does not require personal tax returns or income verification. This program is particularly useful for investors with multiple properties, self-employment income, or complex tax situations.
Bridge-to-permanent refinancing provides the exit strategy for borrowers currently in bridge loans who have completed their value-add business plans. Transitioning from a bridge loan at 9% to 11% to permanent financing at 5.5% to 7.5% creates immediate cash flow improvement. The key is ensuring the property has reached the stabilization metrics (occupancy, DSCR) required by the permanent lender.
Use the commercial mortgage calculator to compare your current payment to potential refinanced terms.
How Does Cash-Out Refinancing Work for Saint Paul Properties?
Cash-out refinancing allows Saint Paul property owners to extract equity that has accumulated through property appreciation, mortgage principal paydown, or both. The proceeds can fund renovations, acquisitions of additional properties, business expansion, or other investments.
The cash-out amount is determined by the difference between the new loan amount and the existing loan balance. For example, if your Saint Paul property appraises at $2 million and you qualify for a 70% LTV cash-out refinance ($1,400,000 new loan), and your existing loan balance is $1,000,000, you would receive $400,000 in cash-out proceeds (minus closing costs).
Maximum LTV for cash-out refinancing is typically 5% to 10% lower than rate-and-term refinancing. Agency multifamily cash-out allows up to 75% LTV. Conventional bank cash-out typically caps at 65% to 70% LTV. CMBS cash-out allows up to 70% LTV. DSCR cash-out allows up to 75% LTV.
The property must demonstrate sufficient cash flow to support the larger new loan. The DSCR must meet the lender's minimum threshold (typically 1.20x to 1.30x) based on the new, larger debt service amount. Rising property values alone do not guarantee cash-out eligibility if the property's income has not kept pace.
Saint Paul properties that have experienced the strongest appreciation and are best positioned for cash-out refinancing include multifamily buildings in Lowertown and the Midway corridor (where transit-driven development has boosted values), industrial properties along the I-94 corridor (where rent growth has been robust), retail properties on Grand Avenue and Highland Village (where low vacancy supports values), and properties near the Highland Bridge development (where neighborhood transformation is driving appreciation).
Use the DSCR calculator to verify your property can support the debt service on a larger cash-out refinance loan.
What Prepayment Considerations Affect Saint Paul Refinancing?
Prepayment penalties on existing loans represent one of the most significant factors in the refinancing decision. Understanding the type and cost of your current prepayment provision is essential before committing to a refinance.
Yield maintenance requires the borrower to compensate the lender for lost interest, calculated using the difference between the loan rate and current treasury rates. In a rising rate environment, yield maintenance costs may be modest. In a declining rate environment, costs can be substantial, potentially exceeding 5% of the loan balance. Yield maintenance is common in CMBS and some bank loans.
Defeasance replaces the loan's collateral with a portfolio of government securities that replicate the remaining payment schedule. The loan remains in place, but the property is released from the mortgage. Defeasance costs include the bond portfolio purchase plus $20,000 to $50,000 in legal and advisory fees. This structure is most common in CMBS loans.
Step-down penalties decline over time, typically structured as 5-4-3-2-1% or 3-2-1% of the outstanding balance. A $2 million loan with a 5% penalty in year one costs $100,000 to prepay, declining to $20,000 in year five. Step-down penalties are common in bank and DSCR loans.
Flat penalties charge a fixed percentage for a set period, such as 2% for the first three years. These are simpler to calculate and more predictable than yield maintenance.
Open periods allow prepayment without penalty after a specified lockout period, typically the last 3 to 6 months of the loan term. Some bank loans become open after 3 to 5 years.
The analysis requires comparing the prepayment penalty cost against the interest savings from refinancing. If a rate-and-term refinance saves $2,000 per month but the prepayment penalty is $60,000, the breakeven period is 30 months. If the savings are $3,000 per month with a $30,000 penalty, the breakeven is only 10 months.
What Interest Rates Can Saint Paul Borrowers Expect for Refinancing in 2026?
Refinance rates in Saint Paul reflect the stabilized interest rate environment of early 2026, with pricing varying by property type, loan program, and borrower profile.
Agency multifamily refinance rates range from 5.30% to 6.25% for seven to ten year fixed terms. Stabilized apartment buildings in Highland Park, Mac-Groveland, and Lowertown with DSCR above 1.30x command rates at the lower end of this range.
Conventional bank refinance rates range from 5.50% to 7.25%. Industrial and well-tenanted retail properties receive the most competitive conventional rates, while office properties carry modest premiums due to sector risk. Local banking relationships with Minnesota institutions can yield pricing advantages of 10 to 25 basis points.
CMBS refinance rates range from 5.80% to 7.50%. The non-recourse benefit of CMBS carries a modest premium over recourse bank financing but provides valuable liability protection for larger assets.
DSCR refinance rates range from 7.00% to 9.50%, with pricing driven by coverage ratio, LTV, borrower credit, and property type. Properties with DSCR above 1.50x and LTV below 65% receive the best terms.
SBA 504 refinance rates range from 5.50% to 7.00% on the CDC portion, with a blended rate across the full capital stack of approximately 6.00% to 7.50%. This represents the most efficient financing for qualifying owner-occupied properties.
What Property Types Are Easiest to Refinance in Saint Paul?
Lender appetite for refinancing varies by property type, reflecting market fundamentals and perceived risk.
Multifamily properties are the easiest to refinance in Saint Paul. Agency programs from Fannie Mae and Freddie Mac create a liquid, competitive market with standardized terms. Stabilized apartment buildings with 90% or more occupancy and DSCR above 1.25x have multiple lender options and can typically close within 45 to 60 days. Even multifamily buildings subject to Saint Paul's 3% rent stabilization ordinance are readily financeable, as lenders are familiar with the regulation and adjust their underwriting accordingly.
Industrial properties attract strong refinancing interest due to their low vacancy and growing rents. NNN-leased industrial buildings with credit tenants are particularly attractive to both bank and CMBS lenders. The Twin Cities metro's position as the Upper Midwest's primary logistics hub provides lender confidence in long-term demand.
Neighborhood retail properties on Grand Avenue, Highland Village, and Selby Avenue refinance readily due to their low vacancy and stable tenant bases. NNN-leased retail with credit tenants qualifies for the most competitive CMBS and conventional terms.
Mixed-use properties where residential use exceeds 51% of income may qualify for agency refinancing at the lowest available rates. Commercial-majority mixed-use buildings refinance through conventional programs at slightly higher rates.
Office properties face the most challenging refinancing environment due to elevated vacancy and remote work uncertainty. Properties with government tenancy or long-term corporate leases refinance more readily than those with private tenants and shorter lease terms. Lenders typically apply lower LTV ratios and higher DSCR requirements for office refinancing.
What Are Common Refinancing Mistakes to Avoid in Saint Paul?
Saint Paul property owners pursuing refinancing should be aware of several common pitfalls that can increase costs or derail the process.
Ignoring prepayment penalties on the existing loan is the most costly mistake. Some borrowers focus entirely on the new loan terms without accounting for the cost of exiting the current loan. Calculate the full cost of prepayment before committing to a refinance, and consider timing the refinance to coincide with an open period or reduced penalty level.
Underestimating closing costs can erode the financial benefit of refinancing. Closing costs for commercial refinancing typically range from 1% to 3% of the new loan amount, including origination fees, appraisal, legal, title, and recording fees. These costs must be weighed against the monthly savings to determine the true breakeven period.
Overvaluing the property in your refinance planning leads to disappointment during appraisal. Be realistic about your property's current market value, particularly for office properties where post-pandemic valuations have shifted. Order a preliminary broker opinion of value (BOV) before committing to a formal appraisal if you are uncertain about the likely valuation.
Waiting too long for rates to drop can backfire. While rates may continue to moderate, timing the market perfectly is impossible. If current rates produce meaningful savings compared to your existing loan, proceeding now locks in those savings rather than risking that rates move higher.
Neglecting to shop multiple lenders leaves money on the table. Rates and terms can vary significantly among lenders, even for the same property. Clear House Lending's network of over 6,000 lenders ensures Saint Paul borrowers access the most competitive terms available.
Frequently Asked Questions About Commercial Refinancing in Saint Paul
How soon after purchasing can I refinance a Saint Paul commercial property?
Most commercial lenders allow refinancing after a seasoning period of 6 to 12 months from the original purchase date. Some lenders require 12 months of ownership history and operating statements. DSCR lenders may allow refinancing after just 3 to 6 months if the property has appreciated or the borrower wants to replace a higher-rate acquisition loan. SBA loans typically require 2 to 3 years of seasoning. If you purchased with a bridge loan, you can refinance into permanent financing as soon as the property reaches stabilization, regardless of the seasoning period.
Can I refinance to consolidate multiple Saint Paul commercial properties?
Consolidation refinancing (blanket loans) is available from some commercial lenders, allowing you to refinance multiple Saint Paul properties under a single loan. This can simplify management and may provide better terms than individual property loans. However, blanket loans create cross-collateralization, meaning all properties secure the single loan. If one property underperforms, it affects the entire portfolio. Most investors prefer individual property financing for this reason, but consolidation can make sense for portfolios of similar properties in the same submarket.
How does Saint Paul's rent stabilization ordinance affect multifamily refinancing?
The 3% annual rent cap affects refinance underwriting for multifamily properties by limiting projected income growth. Lenders apply more conservative rent escalation assumptions, which can modestly reduce the maximum loan amount compared to markets without rent caps. However, the ordinance does not prevent refinancing, and agency, conventional, and DSCR lenders all actively refinance Saint Paul multifamily properties. The ordinance's exemption for new construction (first 20 years) means newer buildings are not affected.
What DSCR is required to refinance a commercial property in Saint Paul?
Minimum DSCR requirements vary by loan program: agency multifamily requires 1.20x to 1.25x, conventional bank loans require 1.25x to 1.35x, CMBS requires 1.25x to 1.30x, and DSCR loans require 1.0x to 1.25x depending on the tier. Properties with DSCR ratios above 1.50x receive the most competitive terms across all programs. If your property's current DSCR falls below minimum thresholds, you may need to reduce the loan amount, accept a higher rate, or explore bridge financing as a temporary solution.
How long does a commercial refinance take to close in Saint Paul?
Closing timelines depend on the loan program: agency refinances close in 45 to 60 days, conventional bank refinances in 45 to 75 days, CMBS refinances in 60 to 90 days, SBA refinances in 60 to 90 days, and DSCR refinances in 21 to 45 days. Having complete documentation (trailing 12-month operating statements, current rent roll, property tax records, insurance certificates, and borrower financials) prepared before starting the process can reduce timelines by 2 to 3 weeks.
Is it worth refinancing if my rate is only 1% above current market?
A 1% rate reduction on a commercial mortgage produces significant savings over the loan term. On a $2 million loan with 25-year amortization, reducing the rate from 7% to 6% saves approximately $1,320 per month or $15,840 annually. Over a 5-year hold period, that totals $79,200 in savings. Compare this against closing costs (typically $20,000 to $60,000) and any prepayment penalties to determine your breakeven period. If the breakeven is less than 2 years and your planned hold period extends well beyond that, refinancing makes financial sense.
Contact Clear House Lending today to discuss commercial refinancing options for your Saint Paul property. Our network of over 6,000 commercial lenders ensures you access the most competitive refinancing terms available in the Twin Cities market.