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

$5 Million Multifamily Refinance in Phoenix

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $5 million multifamily refinance in Phoenix represents a bread-and-butter permanent loan for regional sponsors looking to lock in long-term debt on stabilized garden-style apartments or mid-rise assets across the metro. The Phoenix market has seen strong rent growth and investor demand over the past two years, creating favorable conditions for refi exits at 5.75 percent fixed rates on 10-year terms. At this loan size, borrowers typically target 65 to 75 percent LTV with debt service coverage ratios in the 1.20 to 1.35x range, which qualifies them for agency execution through either Freddie Mac or Fannie Mae programs. The market offers multiple execution paths, with agency small-balance and institutional bank programs competing aggressively for deals with clean underwriting and proven operational history.

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Capital Stack

What a $5M Multifamily Refinance Capital Stack Looks Like

Freddie Mac Optigo small-balance loans and Fannie Mae DUS Small programs dominate this loan size in Phoenix, capturing roughly 70 to 80 percent of permanent multifamily executions in the $3 million to $7.5 million band. Borrowers select between these two agencies based on property condition, borrower recourse appetite, pricing, and loan structure preference, with Freddie often favoring slightly lower leverage and Fannie offering more flexibility on property age and mixed-use configurations.

Capital Source Rate / Cost Size / LTV Notes
Freddie Mac Optigo SBL (agency) 5.75 to 6.00 percent fixed, 10-year term $5.0M at 70 to 75 percent LTV Full recourse or limited recourse standard; 0 to 12 month IO available; requires minimum 1.25x DSCR; max property age typically 40 years; pricing improves with higher DSCR and longer seasoning
Fannie Mae DUS Small (agency) 5.75 to 5.95 percent fixed, 10-year term $5.0M at 70 to 75 percent LTV Full recourse with carve-out or limited recourse; flexible IO period up to 2 years; 1.20x DSCR minimum covenant; allows value-add and mixed-use; faster closing timeline (45 to 60 days)
Regional bank balance sheet 5.80 to 6.15 percent fixed, 5 to 7 year term $2.5M to $5.0M at 65 to 70 percent LTV Faster approval and closing; relationship-based pricing; shorter fixed term often preferred; recourse to sponsor; some banks offer IO periods; competitive for sponsors with prior bank relationships
Credit union or community lender 6.00 to 6.35 percent fixed, 7 to 10 year term $1.5M to $4.0M at 60 to 68 percent LTV Local market knowledge; relationship lending; typically requires 1.30x minimum DSCR; recourse standard; longer approval timeline but flexible on property condition; less common for full $5M but viable alternative

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 executing a $5 million multifamily refinance in Phoenix holds $20 million to $75 million in total assets under management, with a track record of 5 to 15 prior acquisitions or refinances across the Southwest region. These operators are usually experienced multifamily managers with clean underwriting records, stable rent rolls, and strong sponsor liquidity; they refinance to lock in permanent debt ahead of rate volatility, pull out equity for new acquisitions, or consolidate higher-cost construction debt from recent value-add completions. Net worth requirements are typically $2 million to $5 million, with agency lenders preferring sponsors who show continuity in asset management and a clear business plan for hold periods of 7 to 10 years.

From the CLS CRE Pipeline

A Real $5M Example

CLS CRE closed a $4.8 million permanent refinance on a 124-unit garden-style asset in central Phoenix built in 1998. The borrower achieved 72 percent LTV, a 1.28x DSCR on strong market-rate rents, and locked 5.75 percent fixed on a 10-year Freddie Mac Optigo execution with 12 months of interest-only upfront to fund minor capital improvements. The sponsor had owned the property for 6 years, executed a successful rent-growth strategy, and used the refinance proceeds to pay down a higher-cost bridge loan and fund acquisition activity in the Tempe submarket. Closing took 52 days from full application to funding, and the lender offered a streamlined refi process given the sponsor's prior agency relationships and clean payment history.

Anonymized. All deal references protect borrower and lender identity.

FAQ

$5M Multifamily Refinance Phoenix FAQ

Agency programs (Freddie Mac and Fannie Mae) typically require a minimum 1.20 to 1.25x DSCR on the refi note rate, calculated using trailing 12-month NOI. Most lenders prefer 1.28x or higher to ensure buffer for market downturns and to qualify for best-execution pricing. Regional banks often accept 1.20x minimum but may require 1.30x or higher if recourse is limited.
Agency executions typically close in 45 to 65 days from full application, provided the borrower has clean appraisals, title, and tax returns ready upfront. Regional bank refi loans can close in 30 to 45 days due to simpler approval processes, while more complex structures or condition issues can extend timelines to 75 to 90 days.
Yes, both Freddie Mac and Fannie Mae offer IO periods of 0 to 24 months on permanent multifamily loans at this size, though extended IO periods may require slightly higher rates. Interest-only periods are most common when borrowers need short-term cash flow relief or plan capital improvements immediately after closing, and they typically add 5 to 15 basis points to the rate.
Most permanent refinances on stabilized multifamily assets in Phoenix execute at 65 to 75 percent LTV, depending on property condition, sponsor experience, and market conditions. Newer assets or those with strong DSCR may achieve 75 to 77 percent LTV, while older properties or those with lower coverage ratios typically max out at 65 to 70 percent LTV.
Both agencies offer competitive pricing and terms at this loan size; Freddie Mac Optigo SBL tends to price slightly better for properties under 40 years old with strong debt service coverage, while Fannie Mae DUS Small offers more flexibility on property age, mixed-use configurations, and IO periods. Your choice should be driven by property profile, your recourse appetite, and whether you need faster closing timeline (Fannie often faster) or want maximum LTV (Freddie more conservative but sometimes tighter spreads).


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