Navigating Mixed-Use and Multifamily Debt: A Capital Advisor’s Playbook
If you own multifamily or mixed-use real estate, the lending landscape right now is more nuanced than most borrowers realize. Lender appetite for multifamily is at the top of the list, lenders are pricing it more aggressively than almost any other asset class. But aggressive appetite does not mean easy money. Knowing how to position your property, choosing the right lender, and timing your move correctly makes all the difference.
Multifamily vs. Mixed-Use — They Are Not the Same
One of the most common mistakes I see from investors is assuming their mixed-use property will qualify for the same financing terms as a purely multifamily one. It often will not. The key threshold to understand is this: if the commercial income on a mixed-use property exceeds 20-25% of the total gross rental income, most lenders will require a 25-year amortization rather than the standard 30-year. That difference in amortization directly affects the loan amount a borrower can qualify for, and it catches a lot of investors off guard when they have been underwriting to a 30-year assumption.
The percentage rule varies by lender, some draw the line at 20%, others at 30%, and that is exactly where having the right advisor matters. Our job is to find which lender’s criteria aligns best with your specific property’s income mix.
Which Lender Is Right for Your Deal?
In many markets right now, banks are leading the charge in terms of transaction volume. Local banks understand the market, tend to be more aggressive on loan-to-value, and are a good fit for borrowers who prefer shorter-term fixed rate financing , think three to five year terms, with the flexibility to refinance as rates change.
Life insurance companies are the right call for stabilized assets with lower leverage needs. You get the best available rate, but with a more conservative underwriting approach and a longer-term outlook. If you are a set-it-and-forget-it type of owner, life companies are your lane.
CMBS becomes relevant once you are in the $10 million and above range. They underwrite to interest only, which can push leverage higher than banks or insurance companies are willing to go and they offer non-recourse execution. For larger deals where cash flow constraints are limiting conventional options, CMBS is worth a serious look.
Debt funds have become increasingly active over the last two years, stepping in for properties that are not yet ready for conventional financing. If your property has vacancies, is going through stabilization, or has a construction loan that needs to be retired before a conventional lender will touch it, bridge loan through a debt fund is often the most practical path forward.
The Mistake That Costs Borrowers the Most
I have had more conversations than I can count with owners who were waiting for rates to come down before pulling the trigger on a refinance. Earlier this year, five-year US Treasury rates dipped to 3.6% and ten-year rates briefly touched below 4%, commercial mortgage rates on multifamily were in the low to mid 5% range, a level we had not seen in some time. Many borrowers said they would wait a few more months for rates to fall further.
Then March happened. Geopolitical conflict, inflation pressure, and jobs data all hit at once. Treasuries moved up 50 basis points, and those same borrowers were looking at materially higher rates than the ones they had passed on.
Hope is not a strategy. If the numbers work today and you have the capacity to move, move. Start the conversation early, get your books in order, fill your vacancies, and work with someone who can help you evaluate your options before the window closes.
Looking Ahead – A Nor Cal Perspective
San Francisco is as active as I have seen it in years. AI company leases are driving real rent growth, and lender confidence in that market is strong. The East Bay remains solid for workforce housing, and the Peninsula continues to be coveted for lower leverage, high-quality deals. Sacramento sits in the middle, performing steadily but sensitive to broader economic shifts.
For any multifamily or mixed-use owner with a loan maturing in the next 6 to 12 months, now is the time to start the conversation. Not when the maturity date is two months away.