Short answer
Amortizing deleverages the loan naturally, reducing refinance risk, but reduces current distributions by 30 to 50 percent compared to interest-only.
When does interest-only fit?
Acquisition holds where current cash-on-cash matters for investor distributions, refinances where the sponsor wants to maximize cash extraction, and any business plan that anticipates exit or refinance within the loan term so amortization deleverage is not value-creating.
When does amortizing fit?
Long-hold strategies where the sponsor wants to organically deleverage over time, conservative investors who prioritize refinance flexibility at maturity, and HUD or other programs where amortizing structure is a program requirement and IO is not offered.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1