What interest rates do apartment loans have?
Apartment loan rates depend on the source: agency and bank loans on stabilized buildings typically price at a spread of about 1.5 to 3 points over the matching Treasury, DSCR lenders that go to ten units price like residential investor loans, and bridge loans for value-add run 8 to 12 percent interest-only. Leverage, coverage, market, sponsor strength, and the fixed period set where you land within each range.
By source
| Source | Typical pricing | Fixed period | Notes |
|---|---|---|---|
| Agency small balance | Treasury plus about 1.5 to 2.5 points | 5 to 30 years | Non-recourse, stabilized only |
| Bank or credit union | Treasury plus about 2 to 3 points, or prime-based | 5 to 10 years, then reset | Full recourse, relationship pricing |
| DSCR lender (up to 8 or 10 units) | 1 to 2 points above conventional investor rates | 30-year fixed available | Residential-style underwriting |
| Bridge or debt fund | 8 to 12 percent | 12 to 36 months | Value-add and lease-up |
| CMBS (larger loans) | Treasury plus about 2 to 3 points | 10 years | $2 million and up, non-recourse |
Ranges vary by lender and move with the bond market.
What drives the rate
Leverage. 65 percent loan-to-value prices lower than 80.
Coverage. A 1.40 ratio earns better pricing than 1.20.
Market. Agencies and banks price strong metros lower than small or rural markets.
Fixed period. A ten-year fixed costs more than a five-year fixed in a normal yield curve.
Prepayment structure. Yield maintenance usually earns a slightly lower rate than a step-down.
Sponsor. Experience, net worth, and liquidity move the rate a quarter point or more.
Interest-only. Adds a small premium and improves early coverage.
Comparing apples to apples
A bank quote at a lower rate with a five-year reset and full recourse is not the same as an agency quote at a slightly higher rate fixed for ten years, non-recourse. Compare on total cost over your expected hold, including the prepayment penalty if you sell in year four, and on what happens at the reset.
A worked example
$1.5 million loan, 30-year amortization:
- At 6.5 percent: annual debt service about $113,800.
- At 7.25 percent: about $122,800.
- The difference is $9,000 a year, and it also changes the coverage test, which can change the maximum loan.
Locking the rate
Agency and CMBS loans lock at or near application with a deposit. Bank loans often float until closing. In a rising market, an early lock is worth asking for.
How CommFi handles it
Our lending desk prices agency, bank, DSCR, and bridge options on the same application and shows total cost over your hold, not just the headline rate. It funds direct when it fits, and when a bank or agency lender is the better fit, the desk searches a database of 7,000+ lenders and the ones active in your market compete on rate. Zero upfront fees.
Related reading
Related questions
- What interest rate do apartment loans have?
- Agency and bank loans on stabilized buildings price at roughly 1.5 to 3 points over the matching Treasury; bridge loans for value-add run 8 to 12 percent.
- Are multifamily rates lower than single-family investor rates?
- Often, on stabilized buildings with agency or bank financing, because the loans are larger and underwritten on income. Small buildings financed by DSCR lenders price like residential investor loans.
- Does a longer fixed period cost more?
- Usually. A ten-year fixed prices above a five-year fixed in a normal yield curve.
- What is yield maintenance?
- A prepayment penalty that compensates the lender for lost interest if you pay off early when rates have fallen. It can be large; step-down penalties are more predictable.
- When does a multifamily rate lock?
- Agency loans lock at or near application with a deposit. Bank loans often float until closing.
Property developer and licensed appraiser. 22+ years in real estate: TIC conversions, multi-unit redevelopments, mixed-use, fix and flips, commercial DSCR.