WHY REFINANCE
5 Reasons Commercial Property Owners Refinance
Refinancing isn't just about a lower rate. It's about restructuring your loan to match where your business is today.
Lower Your Interest Rate
If rates dropped or your property's value improved, you may qualify for meaningfully better terms today.
Cash-Out Equity
Access capital from your property’s equity to fund expansion, cover TI, or consolidate debt. Up to 75% LTV.
Balloon Payment Coming
Many CRE loans have 5–7 year balloons. Start the refi process 6–12 months before maturity.
Exit Hard Money
Hard money at 9–13% served its purpose. Refinance into a bank or SBA loan at 6.25–8%.
Fixed vs Floating
Floating rates expose you to payment volatility. Lock in a fixed rate for the full term (5–25 yr) for payment stability.
Improve DSCR
Better loan structure improves your Debt Service Coverage Ratio, strengthening your profile for future lending.
REFINANCE OPTIONS
Which Refinance Fits Your Situation?
The right structure depends on your property type, occupancy, and goals.
| Situation | Best Route | Rate | LTV |
|---|---|---|---|
| Owner-occupied | SBA 504 Refinance | 6.25–7.25% | Up to 90% |
| Investment / rental | Conventional / DSCR | 6.5–8.75% | Up to 75% |
| Hard money exit | Bank or Private Takeout | 6.5–13% | Up to 75% |
| Cash-out needed | CRE Cash-Out Refi | 6.5–8.75% | Up to 75% |
| Balloon approaching | Rate & Term Refi | 6.25–8% | Up to 80% |
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
BREAK-EVEN
Example: When Does a Refinance Pay for Itself?
A lower rate saves money only after the savings repay the cost of refinancing. Here is one case run through our refinance break-even calculator, with assumptions for illustration only.
Example: a $2,000,000 balance at 7.5% with a $14,780 monthly payment (25-year amortization), refinanced to 6.5% over 25 years. Closing costs of $40,000 (2%) and a $20,000 prepayment penalty (1%) on the old loan.
| Amount | |
|---|---|
| New monthly payment | $13,504 |
| Monthly savings | $1,276 |
| Total cost to refinance | $60,000 |
| Break-even | 48 months |
| Net savings after 5 years | $16,551 |
| Break-even without the prepayment penalty | About 32 months |
If you expect to sell or refinance again within four years, this refinance loses money; if you will hold longer, it pays. The prepayment penalty adds 16 months here — which is why the old loan’s penalty schedule matters as much as the new rate.
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
COSTS
Refinance Costs and Prepayment Penalties
What a commercial refinance costs:
| Cost | Who sets it | What to check |
|---|---|---|
| Origination fee | The new lender | Quoted in points (1 point = 1% of the loan) |
| Appraisal and third-party reports | Ordered by the lender, paid by you | Environmental and property condition reports on many loans |
| Lender legal fees | The lender’s counsel | Ask for a cap before signing the term sheet |
| Title insurance and recording | Title company, county | A new lender’s policy; recording tax in 12 of 51 jurisdictions |
| Prepayment penalty on the old loan | Your current loan documents | Often the largest single cost — see below |
The three kinds of prepayment penalty:
- Step-down — a fixed percentage of the balance that falls each year (for example 3%, 2%, 1%). Common on bank and DSCR loans.
- Yield maintenance — pays the lender the interest it loses when your rate is above today’s Treasury yield; it can be large when rates have fallen.
- Defeasance — used on CMBS loans: you buy Treasury securities that make the remaining payments. It gets cheaper as Treasury yields rise.
More detail and examples: commercial loan prepayment penalties explained.
Typical ranges, updated September 2026. Your terms depend on the property, the borrower and the lender.
REQUIREMENTS
Do You Qualify?
CRE refinance requirements vary by loan type. Here's what most lenders look for. On leased property the leases matter as much as the borrower — see how lenders size a retail strip center refinance when leases are about to expire.
THE PROCESS
How CRE Refinancing Works
Review Your Current Loan
Gather your current loan statement, property address, estimated value, and remaining balance. Know your maturity date and current rate.
Submit to BestLoanUSA
Share your property details, loan purpose, and financial profile. No credit pull required at this stage.
Advisor Review
Dedicated advisor reviews your situation, identifies the most likely lender routes, and discusses structure options with you directly.
Lender Matching & Offers
We match your deal to banks, credit unions, SBA lenders, and private lenders based on property type, geography, LTV, and DSCR.
Documentation & Underwriting
Typical docs: rent roll or business financials, 2 years tax returns, property appraisal, title, and existing loan payoff statement.
Close & Fund
New lender pays off your existing loan. You begin repayment under the new structure. Timeline: 30–60 days from application.
Free tools
Run the numbers
The same metrics a lender checks — free, instant, no signup. Each result links straight into an application.
- Refinance Break-Even Calculator Find out exactly how many months until your refinancing savings cover the closing costs. Make a data-driven decision on whether to refinance your CRE loan.
- Cash-Out Equity Calculator Calculate how much equity you can pull from your commercial property. See your maximum cash-out amount, new loan terms, and the impact on monthly payments.
- Commercial Mortgage Calculator Estimate your monthly CRE loan payment, total interest cost, and full amortization schedule. Compare loan structures before you apply.
FAQ
Frequently Asked Questions
What is commercial real estate refinancing?
CRE refinancing replaces your existing commercial mortgage with a new one — typically to lower your rate, adjust your term, pull out equity, or exit a short-term loan like hard money.
What credit score do I need?
Most lenders prefer 660+. Some community banks and DSCR lenders work with 640+. Stronger DSCR and LTV give lenders more flexibility on credit.
How does DSCR affect my refinance?
DSCR measures whether your property income covers debt payments. Most lenders require 1.20x minimum. A higher DSCR unlocks better rates and higher loan amounts.
How do I know if refinancing my commercial property is worth it?
Divide the total cost of refinancing — closing costs plus any prepayment penalty — by the monthly savings. That is your break-even in months. In our example, $60,000 of costs and $1,276 a month of savings break even in 48 months; if you plan to hold the property longer than that, the refinance pays.
What does it cost to refinance a commercial mortgage?
The new lender’s origination fee, the appraisal and third-party reports, the lender’s legal fees, title insurance and recording — plus mortgage recording tax in the few states that charge it and any prepayment penalty on the loan you are paying off. Get the total from each lender’s term sheet and the title company’s estimate.
How long does it take to close?
Standard CRE refinances close in 30–60 days. SBA 504 may take 60–90 days. Private and bridge loan refinances can close in 2–3 weeks.
Can I refinance a hard money loan into a conventional loan?
Yes. Once your property is stabilized, you can take out the hard money loan with a conventional bank, SBA, or DSCR loan at a much lower rate. This is called a takeout refinance.
What documents do I need?
2 years tax returns, 3–6 months bank statements, rent roll or business P&L, existing loan payoff statement, and a lender-ordered appraisal.
Related on BestLoanUSA
Related financing
All loans →- Hard Money Takeout A hard money takeout refinance replaces a short-term hard money or bridge loan with a long-term loan once the property is renovated, leased or stabilized. Bank, SBA and DSCR lenders typically lend up to 75% of value at about 6.25–8.75%, compared with 9–13% for hard money. RefinancingHard money
- Cash-Out Refinance A commercial cash-out refinance replaces your current mortgage with a larger loan and pays you the difference in cash — to renovate, expand, pay down costlier debt or buy another property. Lenders typically go to 65–75% of today’s appraised value (up to 90% for an owner-occupied SBA 504 refinance), at about 6.5–8.75%. Cash-out refinanceRefinancing
- Retail A retail property loan finances storefronts, strip centers, shopping centers and single-tenant net-lease buildings. Investors use bank, DSCR or CMBS loans, sized on the leases and tenant quality; a business that occupies its storefront can use SBA 504 with as little as 10% down. RefinancingCMBS
- What Is a CRE Loan? A commercial real estate loan is financing for income-producing or business-use property — offices, retail, industrial, multifamily (5+ units) — underwritten on the property’s cash flow and value as well as the borrower, not a home mortgage. RefinancingCMBS
Guides & articles
All articles →- Cash-Out Refinance on Commercial Property: Accessing Equity How a cash-out refinance on commercial property works: how much equity you can take out, what lenders require, the costs, and when it makes sense. Cash-out refinanceRefinancing
- Commercial Real Estate Refinancing: When and How to Qualify When refinancing a commercial mortgage makes sense, your options before a balloon comes due, and what lenders need to approve the new loan. RefinancingBalloon payment
- The 2026 CRE Maturity Wall: Refinancing a Loan That Comes Due $875 billion of commercial mortgages are scheduled to mature in 2026. How to size the gap when a low-rate loan refinances at today’s rates, and how to close it. RefinancingBalloon payment
Glossary
All terms →More calculators
All calculators →- Defeasance Calculator Estimate the total cost of defeasing your CMBS or conduit commercial loan. See the Treasury portfolio cost, transaction fees, and how it compares to yield maintenance. CMBSPrepayment penalty
- Debt Yield Calculator Calculate Debt Yield (NOI ÷ Loan Amount) — the metric CMBS and institutional lenders prioritize over DSCR and LTV. Find your maximum loan amount based on target debt yield. CMBSDSCR
- Yield Maintenance Calculator Estimate your prepayment penalty before refinancing or selling. Understand the true cost of exiting your commercial loan early and compare penalty structures. Prepayment penaltyRefinancing