Include a debt fund when (1) the deal exceeds 70% leverage on stabilized perm or 75% on bridge, (2) the property is non-stabilized and needs a value-add bridge, (3) the timeline is too tight for agency or CMBS , or (4) you want a high-leverage cross-bid to pressure-test a stabilized perm bake-off .
How debt funds price into a lender comparison
Leverage-driven inclusion: debt funds typically lend up to 75% to 80% LTC on bridge and up to 75% LTV on perm; bank perm caps at 65% to 70% and life-co perm at 60% to 70%. When the sponsor needs higher leverage, a debt fund may be the only category that can size the deal.
Non-stabilized inclusion: debt funds underwrite to a stabilized pro forma rather than current operating numbers, making them the right fit for value-add, lease-up, and repositioning deals. Banks and life cos typically require stabilization before lending; CMBS requires meaningful stabilization with limited tolerance for pro-forma value.
Timeline-driven inclusion: debt funds can typically close in 30 to 45 days from term sheet on a clean deal. Banks and life cos take 60 to 90 days; agency takes 90 to 120; CMBS takes 60 to 90; HUD takes 6 to 9 months.
Cross-bid inclusion: even when a perm execution is the right answer, including one debt fund as a high-leverage cross-bid creates pricing pressure and gives the borrower an alternative if the perm bidders try to retrade. The cross-bid often produces 10 to 25 bps of pricing improvement on the perm bidders alone.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1