Commercial Real Estate Loan Rates: Current Ranges by Property Type and Lender

Commercial real estate loan rates vary significantly based on the lender type, property category, and deal structure. Unlike residential mortgages, where rates are relatively standardized, CRE financing operates across a wide spectrum of capital sources, each with distinct pricing models.

Rate Ranges by Lender Type (2025-2026)

• Bank loans (conventional): 5.75% to 8.5% for stabilized properties with strong borrower profiles. Banks typically offer the lowest rates but impose the strictest qualification standards.
• SBA 504 loans: 5.5% to 7.0% on the CDC portion (fixed, below-market rate tied to Treasury yields). The bank portion carries market rates. See SBA 504 interest rates for a detailed breakdown.
• SBA 7(a) loans: Prime + 1.5% to Prime + 2.75% (variable), resulting in effective rates of approximately 9.0% to 10.25% at current prime. See SBA 7(a) interest rates for current spreads.
• CMBS (conduit) loans: 6.0% to 8.0% for stabilized commercial properties. Non-recourse structure with higher prepayment costs.
• Life insurance company loans: 5.5% to 7.5% for institutional-quality assets. Lowest rates available but limited to premium properties and borrowers.
• Debt funds and private lenders: 8.0% to 12.0%+ for value-add, transitional, or higher-risk deals. Speed and flexibility come at a premium.
• Bridge loans: 8.5% to 13.0% for short-term financing on acquisitions, repositioning, or properties that do not yet qualify for permanent financing. See bridge loan rates for current ranges.

These ranges reflect the general market. Individual quotes depend on the specific property, borrower financial strength, loan-to-value ratio, and debt service coverage ratio.

Lenders price risk differently depending on the underlying real estate. Properties with stable, predictable cash flows command lower rates, while those with higher operational complexity or vacancy risk carry premiums.

Rate Premiums by Property Category

• Multifamily (5+ units): Typically the lowest CRE rates, 25 to 75 basis points below general commercial. Agency financing (Fannie Mae, Freddie Mac) provides additional below-market options for qualifying apartment properties.
• Industrial and warehouse: Rates in line with or slightly below general commercial benchmarks. Strong demand and low vacancy have made this a favored asset class among lenders.
• Office: Rates have widened 50 to 150 basis points above pre-2023 levels due to remote work trends and rising vacancy. Suburban and Class B/C office face the steepest premiums.
• Retail: Single-tenant net-leased retail with investment-grade tenants prices at a discount to general CRE. Multi-tenant and non-anchored strip centers carry higher rates reflecting re-leasing risk.
• Hospitality: Hotels and motels carry 100 to 200+ basis points above stabilized commercial rates due to revenue volatility. Seasonal properties face additional premiums.
• Special purpose (medical, self-storage, car wash): Rates vary widely. Healthcare and medical properties with long-term leases may price favorably, while single-use assets without alternative occupancy carry risk premiums.

Owner-occupied properties often qualify for better rates than investment properties because the borrower's business operations create additional repayment support beyond rental income alone.

CRE lenders evaluate several interconnected variables when setting loan pricing. Understanding these factors gives borrowers leverage to negotiate and structure deals that qualify for lower rates.

Borrower-Side Factors

• Credit score: Most conventional lenders require a minimum of 680, with rates improving materially above 720. SBA programs may accept scores as low as 650 but at higher pricing tiers.
• Net worth and liquidity: Lenders expect borrowers to have post-closing liquidity equal to 6 to 12 months of debt service payments. Higher reserves signal lower risk and improve rate offers.
• Experience: Borrowers with a demonstrated track record in the property type receive better pricing. First-time CRE borrowers may see rates 25 to 100 basis points higher than experienced operators.
• Personal guarantees: Full recourse deals (where the borrower personally guarantees repayment) price lower than non-recourse structures because the lender carries less risk.

Property and Deal Factors

• Debt service coverage ratio (DSCR): Most lenders require a minimum DSCR of 1.20x to 1.25x. Properties demonstrating 1.40x+ coverage gain access to preferred rate tiers.
• Loan-to-value ratio (LTV): Lower LTV means better rates. Dropping from 80% LTV to 65% LTV can improve pricing by 25 to 75 basis points. See CRE down payment requirements for how equity levels affect deal structure.
• Fixed vs. variable rate: Fixed-rate loans carry a premium of 50 to 150 basis points over variable rates at origination, but eliminate interest rate risk over the loan term.
• Loan term and amortization structure: Longer amortization periods (25 to 30 years) reduce monthly payments and improve DSCR, but lenders may charge slightly higher rates for extended terms. Interest-only periods improve near-term cash flow but come at a pricing premium.

The rate structure you choose affects not only your monthly payment but also your total cost of capital and refinancing flexibility. Each structure carries trade-offs between certainty and cost.

Fixed-Rate CRE Loans

Fixed rates lock in your interest cost for a defined period, typically 5, 7, or 10 years. The rate does not change regardless of market movement. Fixed-rate CRE loans are most common through CMBS, life insurance companies, and SBA 504 programs. The trade-off is higher initial pricing and, in many cases, significant prepayment penalties including yield maintenance or defeasance.

Variable-Rate CRE Loans

Variable rates are typically indexed to the Secured Overnight Financing Rate (SOFR) or the Prime Rate, plus a spread. For example, a bank might quote SOFR + 2.50%. Variable rates start lower than fixed rates but expose borrowers to rate increases if the benchmark rises. Most variable-rate CRE loans include rate caps or floors that limit exposure in either direction.

Hybrid Structures

Many lenders offer hybrid products that combine a fixed-rate period (3 to 5 years) with a variable period for the remaining term. These products appeal to borrowers who want initial payment certainty but plan to refinance or sell before the variable period begins. They also tend to carry less severe prepayment penalties than full fixed-rate structures.

When comparing rate offers across lender types, always evaluate the all-in cost of capital, not just the stated rate. Origination fees (typically 0.5% to 2.0% of the loan amount ), closing costs, and prepayment structures can materially change the effective rate over the hold period. See evaluating loan offers for a framework to compare total cost across different structures.

Borrowers who approach CRE financing strategically, rather than accepting the first offer, consistently achieve better pricing. The following steps can reduce your rate by 50 to 200+ basis points compared to an unprepared approach.

1. Strengthen Your Loan Package Before Applying

Prepare a complete, professionally organized loan package: three years of tax returns, current personal financial statement, rent roll, trailing 12-month operating statement, property condition report, and a clear business plan. Lenders reward preparation with better terms because a strong package reduces their underwriting cost and signals a sophisticated borrower.

2. Optimize Your Deal Metrics

Before approaching lenders, work backward from target rates. If you need a DSCR of 1.25x to access standard pricing, consider whether a larger equity injection or lease improvements could push your coverage above that threshold. Similarly, bringing LTV below 70% opens preferred pricing tiers at most banks.

3. Match Your Deal to the Right Lender Type

Different lenders serve different niches. A stabilized multifamily property with strong occupancy will price best through agency lending or a life insurance company. A value-add retail property may get more competitive pricing from a local bank with market expertise than from a national CMBS lender. Understanding CRE loan types and which lenders specialize in each helps you target the right capital source.

4. Solicit Multiple Quotes

Obtain term sheets from at least three lenders before committing. Rate quotes on the same property from different lenders routinely vary by 50 to 100+ basis points. Use competing offers as leverage; most lenders will sharpen their pricing when they know you have alternatives.

5. Consider Rate Locks and Timing

In volatile rate environments, a rate lock at application (rather than at closing) protects against increases during the 60 to 90-day underwriting period. Rate locks may cost 0.25% to 0.50% of the loan amount but provide certainty on a major cost variable.

6. Build Lender Relationships

Repeat borrowers at the same bank or lending institution consistently receive better pricing than new customers. If you plan to acquire multiple properties, building a relationship with a lender who specializes in your property type and market creates compounding rate advantages over time. This is especially relevant for real estate investors executing a portfolio growth strategy.

The lowest rate is not always the best deal. In several scenarios, accepting a higher rate produces a better outcome when measured against your full business objectives.

• Speed to close: Bridge loans and private lender rates are higher, but if closing in 2 to 3 weeks (versus 60 to 90 days for conventional) allows you to win a competitive acquisition, the rate premium may be far less than the cost of losing the deal.
• Prepayment flexibility: A loan at 7.5% with a 1% prepayment penalty may cost less over a 3-year hold than a loan at 6.5% with yield maintenance that effectively locks you in for the full term. Model the total cost across your expected hold period.
• Non-recourse protection: Paying 50 to 100 basis points more for a non-recourse structure limits your personal exposure to the property itself. For larger deals, this risk management trade-off is often worth the premium.
• Higher leverage: A lender offering 80% LTV at 8.0% may produce better equity returns than a lender offering 65% LTV at 6.5%, because the lower equity requirement amplifies your return on invested capital. Understanding capital stack architecture helps quantify this trade-off.

Every CRE financing decision should be evaluated in the context of your broader growth capital strategy, not on rate alone. A well-structured deal at a moderate rate often outperforms a poorly structured deal at the lowest available rate.