Commercial Mortgage Rates 2026
What Permanent Loan Borrowers Are Paying by Lender Source
Commercial mortgage rates in May 2026 range from 5.50% for top-tier life insurance company loans to 7.75% for bank and credit union financing. Permanent loan rates are driven by the 5, 7, or 10-year US Treasury yield plus a credit spread that reflects loan quality, leverage, property type, and lender demand. Rates have moderated from 2023 peaks as Treasury yields have come off their highs and lender competition has intensified.
Current Rate Table
Rates shown are indicative ranges based on current market conditions. Your actual rate will depend on your specific property, leverage, and borrower profile. Contact Commercial Lending Solutions for a precise quote.
| Leverage Tier | Rate Range | Notes |
|---|---|---|
| Life Insurance Companies (60% to 65% LTV) | 5.50% to 6.50% | Lowest rates, 10 to 25-year fixed, strong underwriting standards |
| CMBS / Conduit (65% to 75% LTV) | 6.00% to 7.00% | Higher leverage, non-recourse, fixed rate 5 to 10 years |
| Agency Multifamily (Fannie/Freddie) | 5.75% to 6.75% | Multifamily only, non-recourse, up to 80% LTV with interest only |
| HUD/FHA Multifamily | 5.50% to 6.25% | 40-year fixed, lowest permanent multifamily rate, long approval timeline |
| Commercial Bank / Credit Union | 6.50% to 7.75% | Flexible underwriting, recourse, shorter fixed periods (3 to 7 years) |
Rates are illustrative ranges as of May 2026 and subject to change. All loan programs subject to underwriting approval. Not a commitment to lend.
What Drives Commercial Mortgage Rates
Understanding these factors helps you position your deal for the best available rate.
Treasury Yields
Commercial mortgage rates are priced as a spread over 5, 7, or 10-year Treasury yields. A 250 basis point spread over a 4.25% 10-year Treasury equals a 6.75% mortgage rate. When Treasuries move, commercial mortgage rates move with them, typically within 30 to 60 days.
Loan-to-Value Ratio
Lower leverage earns lower rates across every lender type. A life company charging 5.75% at 60% LTV might charge 6.50% at 65% LTV. Banks commonly have rate-step grids where rate increases at each 5% LTV increment.
Property Type and Quality
Class A multifamily and industrial in primary markets get the best spreads. Office buildings currently face the widest spreads due to occupancy uncertainty. Hospitality, self-storage, and medical office trade between those extremes.
Lease Term and Tenant Credit (Net Lease)
Net lease properties with long-term investment-grade tenants command the tightest spreads in commercial lending. A CVS or Walgreens on a 20-year NNN lease can achieve life company rates at 5.50% to 6.00%.
DSCR on the Permanent Loan
Lenders underwrite to a minimum DSCR of 1.20x to 1.30x. The stronger the coverage ratio, the better the rate. A property covering debt service at 1.50x commands a better spread than one at 1.20x.
Loan Size
Life companies and CMBS lenders have minimum loan sizes, typically $3M to $5M and $2M to $3M respectively. Smaller loans ($500K to $2M) are better served by banks and credit unions, which price at wider spreads.
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How Commercial Mortgage Compare to Alternatives
Choosing the right loan structure can mean a 100 to 300 basis point difference in your cost of capital. Here is how current rates compare across loan types.
| Loan Type | Current Rate Range | When to Use vs Commercial Mortgage |
|---|---|---|
| Bridge Loans | 7.50% to 11.50% | Floating rate, short-term. Used before the property qualifies for permanent debt. |
| DSCR Loans | 6.50% to 9.00% | For investment properties qualifying on rental income. Good for 1 to 4 unit residential investment properties. |
| SBA 504 | 5.50% to 6.50% (CDC) | Owner-occupied properties only, up to 90% LTV, 20 to 25 year fully fixed. |
| Construction Loans | 7.50% to 11.50% | Floating rate draw facility during construction. Refinanced into permanent financing at completion. |
Commercial Mortgage Rates 2026: Frequently Asked Questions
What are current commercial mortgage rates?
Commercial mortgage rates in May 2026 range from 5.50% to 7.75% depending on the lender type, LTV ratio, property class, and loan size. Life insurance companies offer the lowest rates (5.50% to 6.50%) for conservative leverage on institutional-quality assets. CMBS conduits range from 6.00% to 7.00%. Commercial banks and credit unions price from 6.50% to 7.75% with more flexible underwriting.
What loan term is best for commercial mortgages?
The optimal term depends on your hold period and rate outlook. A 10-year fixed rate from a life company or CMBS lender provides maximum rate certainty for long-term holds. A 5 or 7-year bank loan with a shorter prepayment period offers flexibility if you plan to sell or refinance. Fully fixed 25 to 30-year SBA 504 loans are available for owner-occupants and eliminate refinance risk entirely.
Are commercial mortgage rates higher than residential?
Yes. Commercial mortgage rates are typically 50 to 150 basis points higher than residential mortgage rates for comparable leverage. This reflects the additional complexity of commercial underwriting, the business risk of the tenant, and the lower standardization of commercial loans versus residential mortgages backed by Fannie Mae or Freddie Mac.
What credit score is needed for a commercial mortgage?
Most commercial lenders require a minimum personal credit score of 680 to 700 for the guarantors. Life insurance companies and CMBS lenders underwrite primarily on the property's income and often do not require personal recourse at all. Banks and credit unions conducting full-recourse lending place more weight on personal credit and net worth.
What is the minimum down payment for a commercial mortgage?
Most conventional commercial mortgages require 25% to 35% down (65% to 75% LTV). Life companies typically require 35% to 40% down. Agency multifamily loans allow down to 20% down (80% LTV) with interest-only options. SBA 504 requires only 10% down for owner-occupied properties, making it the highest-leverage commercial real estate financing available.
Trevor Damyan is a commercial mortgage broker with $1B+ in loans closed and direct relationships with life insurance companies, CMBS desks, debt funds, and non-QM lenders. Rate data is compiled from active lender conversations and closed transaction experience.
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