Clear House Lending connects real estate investors and developers with the right lender from our network of 6,000+ private capital sources. Bridge, DSCR, SBA, hard money, and construction loans -- most borrowers get term sheets within 48 hours.
Both offer long-term, non-recourse financing for multifamily properties. Learn the key differences to choose the best option.
Key Takeaways
For multifamily investors, choosing between CMBS and agency financing impacts your borrowing costs, leverage, and ongoing servicing flexibility. Agency loans from Fannie Mae and Freddie Mac offer the best terms for qualified borrowers, while CMBS provides an alternative for those who don't meet strict agency requirements.
$46.3B
U.S. private-label CMBS issuance in 2023
5-10 years
typical CMBS loan terms with 25-30 year amortization
$263B
in multifamily loan originations in 2023
Source: Mortgage Bankers Association
5.5-7%
cap rates for stabilized Class A multifamily properties
Source: CBRE Cap Rate Survey
| Feature | Agency (Fannie/Freddie) | CMBS/Conduit |
|---|---|---|
| Property Types | Multifamily only (5+ units) | All commercial (incl. multifamily) |
| Interest Rates | Lower (5.5-7% typical) | Higher (6-8% typical) |
| Max LTV | Up to 80% | Up to 75% |
| Loan Term | 5-30 years | 5, 7, or 10 years |
| Amortization | 30 years | 25-30 years |
| Minimum DSCR | 1.25x | 1.25x |
| Borrower Requirements | Strict (net worth = loan, 10% liquidity) | Moderate (25% net worth, 5-10% liquidity) |
| Prepayment | Yield maintenance or defeasance | Defeasance (typically) |
| Servicing | Direct with lender (more flexible) | Third-party master servicer (rigid) |
| Assumability | Yes, with lender approval | Yes, with fee and approval |
Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac don't lend directly but purchase multifamily loans from approved lenders, enabling those lenders to offer exceptionally favorable terms.
Commercial Mortgage-Backed Securities (CMBS) loans are originated by banks or conduit lenders, pooled together, and sold to bond investors. This securitization model allows for more flexible borrower underwriting.
Agency financing is typically better when:
CMBS financing is typically better when:
For a $5,000,000 multifamily loan:
Over 10 years, the agency loan saves approximately $288,000 in payments due to the lower rate—assuming you hold to maturity.
Agency loans (Fannie Mae/Freddie Mac) typically offer better rates than CMBS loans, often 25-75 basis points lower. Agency loans benefit from government sponsorship which reduces lender risk and translates to lower borrower rates.
Both typically have restrictive prepayment terms. CMBS loans usually require defeasance, while agency loans may offer yield maintenance or defeasance. Neither is prepayment-friendly, but agency loans sometimes offer declining prepayment options.
Yes, both CMBS and agency loans are typically non-recourse with standard carve-outs for fraud, misrepresentation, and other 'bad boy' behaviors. This is a key advantage of both programs over bank loans which are usually recourse.
Our team works with both agency and CMBS lenders. We'll analyze your property and borrower profile to recommend the best option and secure competitive quotes.
Get a Financing AnalysisFinancing solutions for every stage of the commercial property lifecycle
Financing for the purchase of new commercial assets
Rate, term, and cash-out solutions for existing commercial debt
Long-term, fixed-rate financing for stabilized commercial properties
Short-term funding for quick acquisitions or property stabilization
Securitized, large balance non-recourse commercial real estate mortgages
Government-backed financing for owner-occupied commercial real estate
Commercial financing
Ready to secure your next deal?
Fast approvals, competitive terms, and expert guidance for investors and businesses.