Bank Loans For Apartment Buildings and Commercial Real Estate

All bank loans are not created equal. Banks each have their own niches, especially when you are talking about the differences between community banks, credit unions, regional banks, and national institutions. Some banks offer fully amortizing loans, others cap amortizations at 20 years. Your favorite bank may cap leverage at 70% whereas one right down the street, a bank you never thought twice about, is comfortable financing multifamily properties at 80%.

Maybe you need a floating rate bridge loan, a commercial mortgage with no prepayment penalty like yield maintenance or defeasance. Perhaps you have some documentation constraints. Whatever your individual situation calls for, when it comes to securing bank financing, its crucial to work with an intermediary that has hundreds of banking relationships. An intermediary that can leverage those relationships to your benefit. With the assistance from the right intermediary, its possible to find a perfect bank loan option — that may have been overlooked simply because you qualified for a CMBS, Fannie, or Freddie loan. 

Sample Bank Terms for Apartment and Commercial Properties in 2023

Size: $2 million to more than $50 million

Term: Up to 30 years

Interest Rates: Fixed rates vary, floating rates from 2.30% over LIBOR   

Amortization: Up to 30 years

Maximum LTV: 75%

Minimum DSCR: From 1.20x

Interest-Only Period:  Partial-term and full-term available

Advantages

• Will do smaller loan amounts.

• Can finance troubled assets as long as the borrower has strong supporting financials.

• Faster close than agency.

• More flexible loan terms

Disadvantages

• Occasionally more rigid down payment, income verification and credit score requirements.

• Sometimes requires some sort of recourse for borrower.

• Often shorter amortizations and shorter fixed periods than CMBS and agency loans.

• Stricter with cash out refinances.