$5M Multifamily Refinance Houston | Commercial Lending Solutions 
Loan Size Example

$5 Million Multifamily Refinance in Houston

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $5 million multifamily refinance in Houston represents the sweet spot for agency execution and the entry point for sponsors looking to lock in permanent debt on stabilized assets across the Houston metros. At this size, borrowers benefit from tight spreads, long amortization (typically 30 years), and execution speed from the two major agencies, where rates have settled around 5.85 percent on a 10-year Treasury basis. Houston's multifamily fundamentals remain resilient relative to coastal markets, with reasonable cap rates and steady rent growth supporting solid DSCR profiles in the 1.20 to 1.35x range. Most deals at this level are owner-operators refinancing out of adjustable debt or bridge financing, looking to stabilize cash flow and extend their hold period.

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Capital Stack

What a $5M Multifamily Refinance Capital Stack Looks Like

At $5 million, the capital stack is dominated by two federal agencies competing aggressively for business: a smaller balance sheet lender may participate, but the Freddie Mac SBL (Seller/Servicer Balance Loan) and Fannie Mae Small Multifamily products are the primary execution vehicles. Lender selection typically hinges on sponsor credit quality, property condition, existing relationship, and whether the borrower has a preference for recourse or non-recourse structure, since agency appetite and terms can vary by program.

Capital Source Rate / Cost Size / LTV Notes
Federal agency (Freddie Mac SBL) 5.75 to 5.95 percent $5M / 65 to 75 percent LTV Full amortization over 30 years, non-recourse, 10-year fixed rate, interest-only options available, fastest execution path
Federal agency (Fannie Mae Small) 5.80 to 6.00 percent $5M / 60 to 72 percent LTV Flexible prepayment, non-recourse, 30-year amortization standard, slightly higher pricing than Freddie in competitive environment
Regional bank balance sheet 5.90 to 6.10 percent $1.5M to $2.5M / 60 to 70 percent LTV Typically used for equity or mezzanine layer, full recourse required, relationship-driven pricing, faster approval for repeat sponsors
Life insurance company (junior position) 7.00 to 8.00 percent $500K to $1M / 75 to 85 percent combined LTV Mezzanine debt only, full recourse, useful for sponsors wanting to maximize leverage on agency senior debt, 10-year term typical

Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.

Sponsor Profile

Who Closes a $5M Multifamily Refinance Deal

The typical sponsor for a $5 million Houston multifamily refinance is an established owner-operator with $15 million to $50 million in net worth, a track record of 3 to 8 stabilized multifamily assets, and strong relationships with property and asset managers. Motivations are almost always operational: refinancing floating-rate bridge debt into permanent fixed-rate agency financing, capturing rate locks before further volatility, or extracting equity for reinvestment while maintaining control of a cash-flowing asset. Many sponsors at this level are Houston natives or long-time residents who have built portfolios over 10 to 15 years and view the multifamily sector as core to their wealth strategy.

From the CLS CRE Pipeline

A Real $5M Example

We recently closed a $4.95 million refinance of a 156-unit garden-style community in Midtown Houston, a property originally financed with bridge debt at 7.50 percent and due to mature in 24 months. The sponsor, a local partnership with $40 million AUM, wanted permanent financing to lock in long-term cash flow and avoid a costly extension. We executed with a federal agency partner at 5.85 percent, 30-year amortization, 72 percent LTV, and a 1.28x DSCR, with a 10-year fixed rate and one optional 5-year extension. The borrower achieved a 165 basis point rate reduction and full non-recourse structure, closing in 52 days with no conditions tied to the property's submarket performance.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$5M Multifamily Refinance Houston FAQ

Agency lenders (Freddie Mac and Fannie Mae) typically finance multifamily properties in Houston at 65 to 75 percent LTV for cash-flowing assets with strong DSCR. Sponsors with very clean credit and seasoned properties may approach 75 percent, but most deals settle in the 70 to 72 percent range to ensure lender comfort and avoid execution delays. Higher LTV requests usually require a mezzanine partner or subordinate balance sheet lender.
With an established sponsor and clean property, agency execution typically takes 45 to 65 days from application to closing, assuming no unusual appraisal issues or environmental findings. The Freddie Mac SBL program has slightly faster timelines (45 to 55 days) than Fannie Mae, but both are highly efficient at this loan size. Delays usually stem from sponsor document collection or title issues, not lender friction.
Agency lenders require a minimum DSCR of 1.15x to 1.20x on a 30-year amortization at the loan rate. Most sponsors in Houston achieve 1.25x to 1.35x because the market's rent growth and occupancy stability support solid net operating income. Lenders may impose a DSCR maintenance covenant on non-recourse loans, typically 1.10x to 1.15x, to protect against future underperformance.
Agency loans at this size are typically offered on a non-recourse basis, which is a major advantage for borrowers seeking liability protection. Some regional bank partners may require personal guarantees or recourse for junior pieces, but the agency senior debt (which is usually 60 to 75 percent of the stack) will be non-recourse. Mezzanine lenders almost always require full recourse.
Agency rate locks are typically available for 30 to 45 days without penalty, and most lenders will extend locks by 15 to 30 days for a modest extension fee (10 to 25 basis points). If rates move dramatically upward, sponsors can renegotiate pricing with the lender, though approval speed may be affected. If rates fall sharply, the lender may require appraisal updates or additional due diligence before closing, which can delay execution by 10 to 20 days.


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