Requirements at a Glance
Lenders evaluate qualification across three independent boxes: the property fundamentals, the borrower and sponsorship profile, and the business plan or use of proceeds. A single failure in any box can derail a deal even when the other two are strong.
| Category | Requirement | Detail |
|---|---|---|
| Property | Stabilized occupancy | 90% or greater physical occupancy for at least 90 days prior to application |
| Property | In-place DSCR | 1.20x minimum at most banks and CMBS; 1.25x to 1.30x for life companies and agency |
| Property | LTV | 65% to 75% of as-stabilized appraised value; life companies often limit to 65% |
| Property | Rent roll seasoning | Leases must be executed, tenants in possession, and paying market rents with no significant near-term expirations |
| Property | Property condition | No material deferred maintenance; lender-ordered property condition assessment required |
| Property | Environmental clearance | Phase I ESA required; Phase II if recognized environmental conditions are identified |
| Borrower | Net worth | Roughly equal to the loan amount for the guarantor or key principal |
| Borrower | Liquidity | 10% of loan amount in liquid assets post-close |
| Borrower | Credit score | 700+ FICO from the primary guarantor; 720+ preferred for life company and agency execution |
| Borrower | Operating experience | Demonstrated ownership or management of similar property type; no experience minimum at agency for standard multifamily |
| Documentation | Trailing 12 months operating financials | Monthly P&L and rent roll showing stabilized income over the prior 12 months |
| Documentation | Two years of tax returns | Property entity and personal returns for all key principals with 20% or greater ownership |
| Documentation | Personal financial statement | Current PFS dated within 90 days for all guarantors |
| Documentation | Existing debt schedule | Complete schedule of real estate owned with outstanding balances, terms, and payment history |
Documentation You Will Need
Sponsors who arrive at term sheet stage with these documents in hand close 1 to 2 weeks faster than those who scramble during due diligence.
- Trailing 12 months property P&L and monthly rent roll with lease expirations and rental rates
- Year-end operating statements for the prior 2 years
- Two years of personal and entity tax returns for all key principals
- Personal financial statement dated within 90 days for all guarantors
- Schedule of real estate owned with current balances, lender names withheld, and payment history
- Current rent roll with tenant names, lease start and expiration dates, monthly rents, and security deposits
- Executed leases for any tenant comprising 10% or more of gross revenue
- Property appraisal within 6 months ordered or approved by lender
- Phase I environmental site assessment from a qualified environmental professional
- Property condition assessment from a licensed engineer
- Survey and title commitment
- Entity formation documents, operating agreement, and good standing certificates
- Borrower background authorization for credit and background check
- Current mortgage statement and payoff if refinancing existing debt
What Qualifies You
These are the factors that materially improve qualification odds and pricing.
Strong in-place cash flow relative to debt service
A DSCR of 1.30x or better at the lender's underwritten rate is the single most decisive qualifier for permanent financing. Every 10 basis points of additional coverage above the floor translates to pricing relief and greater lender competition for the deal.
Low LTV relative to program maximum
Sponsors bringing deals at 60% LTV or below unlock the broadest lender universe, including the most competitive life company and agency pricing. Deals at 70 to 75% LTV still clear the box but face more pricing and terms scrutiny.
Rent roll concentration and lease term
A well-diversified rent roll with weighted average lease terms of 5 years or more is strongly preferred. Single-tenant deals or properties with a large rollover in the first 2 years of the loan term get underwritten conservatively and may require structured reserves.
Sponsor financial strength above minimum thresholds
Net worth at 1.25x or more the loan amount and liquidity at 15 to 20% post-close puts the sponsor in the strongest negotiating position on recourse carve-out structure and guaranty burn-off provisions.
Property type in core lender appetite
Multifamily, anchored retail, industrial, and Class A office in primary markets attract the most lender competition. Life companies and agency programs are most aggressive on multifamily. Hospitality and self-storage require specialized lender channels.
Clean borrower credit and litigation history
No bankruptcies in the prior 7 years, no active material litigation against key principals, and no prior loan defaults or losses imposed on lenders are baseline requirements across all permanent lender types. Disclosures of past issues must be made upfront with supporting documentation.
Market location supporting exit liquidity
Permanent lenders underwrite not just the property today but the ability to sell or refinance at loan maturity. Properties in primary and strong secondary markets with demonstrated transaction volume qualify for the most aggressive permanent terms.
What Disqualifies You
Common decline reasons that surface during underwriting. Most can be addressed with structuring or by routing the deal to a different program.
Occupancy below 90 percent at application
Permanent lenders require stabilized occupancy of 90% or greater for a minimum of 60 to 90 days prior to closing. Properties below this threshold are not permanent loan candidates and should be financed with bridge debt until stabilization is achieved.
In-place DSCR below program floor
If trailing 12 months net operating income does not support 1.20x coverage at the proposed loan amount and underwritten rate, the loan will not proceed. Lenders will not credit projected rent increases or expense reductions to reach the threshold.
Recent bankruptcy, foreclosure, or lender loss
A bankruptcy filing within 7 years, a prior foreclosure, or any instance of a loss imposed on a lender is a near-universal disqualifier for life company and agency execution. Bank and CMBS lenders may consider exceptions with full disclosure and strong compensating factors.
Significant deferred maintenance or environmental issues
Material deferred maintenance flagged in the property condition assessment, or recognized environmental conditions requiring Phase II investigation, will pause or kill a permanent loan. Lenders require either remediation prior to closing or funded escrow reserves, and severe conditions result in decline.
Lease concentration risk or imminent major rollover
Properties where a single tenant represents more than 40% of gross revenue, or where 30% or more of the rent roll expires within the first 24 months of the loan term, face material underwriting haircuts and potential decline at conservative lenders.
Typical Qualified Borrower
If your situation matches one of these profiles, the program is likely a strong fit.
- Multifamily owner refinancing a stabilized apartment building out of bridge or construction financing into agency or bank permanent debt
- Long-term hold investor seeking a 10 to 25 year fixed rate from a life company on a net-leased industrial or retail asset
- CMBS borrower with a large-balance single-asset office or mixed-use property seeking non-recourse permanent financing
- Experienced sponsor executing a cash-out refinance on a fully stabilized property to recapitalize equity for a new acquisition
- Owner-user or investment property sponsor rolling a maturing bank loan into a new 5 to 10 year fixed rate permanent mortgage
- Portfolio operator consolidating multiple stabilized properties under a single permanent loan structure through agency or CMBS
Timeline
Commercial permanent loans typically close in 45 to 75 days from term sheet acceptance, with agency executions occasionally extending to 90 days due to program-specific review requirements. The critical path is third-party reports: appraisal, environmental, and property condition assessment together take 3 to 5 weeks to complete and cannot be compressed. Sponsors who deliver a complete documentation package, including tax returns, rent roll, trailing financials, and personal financial statements, at term sheet signing consistently close at the shorter end of the range.
Frequently Asked Questions
What DSCR is required to qualify for a commercial permanent loan?
Most permanent lenders require a minimum DSCR of 1.20x to 1.30x based on trailing 12 months net operating income at the lender's underwritten interest rate. Life companies and agency programs typically require 1.25x or better. DSCR is calculated on actual in-place income only. Projected rents or expense savings are not credited in permanent loan underwriting.
What occupancy level does my property need for permanent financing?
Permanent lenders require 90% or greater physical occupancy, sustained for at least 60 to 90 days prior to closing, as a hard program minimum. Properties below this threshold do not qualify and need bridge financing until stabilization. Occupancy is verified through a current rent roll and lender-ordered estoppels on larger deals.
Is a permanent loan recourse or non-recourse?
Recourse structure depends on lender type. Regional and community banks typically require full recourse guaranties. Life companies, CMBS conduits, and agency programs generally lend non-recourse with standard carve-out guaranties covering fraud, waste, and certain bankruptcy-related acts. Sponsors with strong financial profiles sometimes negotiate burn-off provisions reducing guaranty exposure over time.
What is the difference between bank, life company, CMBS, and agency permanent loans?
Banks offer the most flexibility on property type and structure but typically cap terms at 5 to 10 years with recourse. Life companies offer the lowest rates on core assets with terms up to 25 years at 65% LTV, non-recourse. CMBS provides non-recourse fixed rate execution on larger loans with more flexible underwriting. Agency programs are multifamily-specific, offering the most competitive pricing and longest terms.
How much net worth and liquidity do I need for a permanent loan?
Most permanent lenders require guarantor net worth roughly equal to the loan amount and liquid assets of at least 10% of the loan amount remaining after closing. Life companies and agency programs hold strictly to these thresholds. Some banks will flex on net worth if the property cash flow and LTV are strong, but liquidity requirements are generally firm across all channels.
Can I get a permanent loan on a property with a large single tenant?
Single-tenant properties are financeable on a permanent basis but face more conservative underwriting. Lenders will examine lease term relative to the loan maturity, tenant credit quality, and replacement rent in the event of vacancy. Net-leased properties with investment-grade tenants and long lease terms are preferred. Single-tenant deals with leases expiring within 3 years of loan maturity will face significant LTV restrictions or lender decline.
What property types qualify for permanent financing?
Multifamily, industrial, anchored retail, and Class A office in primary markets are the most competitive permanent loan property types. Agency programs are limited to multifamily. Life companies focus on stabilized core assets across multifamily, industrial, retail, and office. CMBS finances a broader range including hospitality and self-storage. Tertiary market deals and transitional property types qualify only at higher rates and lower proceeds.
How long does it take to close a commercial permanent loan?
Permanent loans typically close in 45 to 75 days from term sheet acceptance. Agency executions can take up to 90 days. Third-party reports, including appraisal, Phase I environmental, and property condition assessment, are the main timeline driver and take 3 to 5 weeks. Delivering a complete documentation package at term sheet stage is the single most effective way to compress the closing timeline.
Ready to See If Your Deal Fits?
Submit your scenario and we will route it to the right program and lender within 24 hours.
Apply Now Call 310.708.0690 Text 310.758.3064