Permanent financing is long-dated commercial mortgage debt on stabilized property, typically 5/7/10/15-year terms with 25- to 30-year amortization , 60% to 75% LTV, non-recourse with carve-outs . Sources: agency multifamily, life insurance companies, CMBS conduits, and bank perm. Each fits different deals.
Four sources: four roles
Agency multifamily (Fannie/Freddie/HUD): default for stabilized multifamily 5+ units. Most competitive pricing in the market for the right deal.
Life companies may provide longer-term financing for stabilized properties. Fit depends on the lender’s property preferences, leverage, term, prepayment provisions and current appetite.
CMBS conduits: middle-market stabilized non-multifamily. Higher leverage than life co; standardized terms; defeasance prepayment.
Bank perm: relationship-driven, smaller balance, often partial-recourse, frequently swap-driven fixed rate.
Sizing math (universal)
Three independent tests, lowest binds: debt yield, DSCR, LTV. Each lender publishes floors by asset and program.
At lower rates: debt yield or LTV usually binds (DSCR is satisfied with room). At higher rates: DSCR usually binds (debt yield satisfied with room).
Borrower's ability to influence: improve trailing NOI (clean adjustments, document below-market lease rollover), document higher value (recent comps, submarket trades), accept partial recourse or higher reserves to relax the binding constraint.
Prepayment trade-offs
Defeasance (CMBS): replace collateral with Treasury portfolio. Expensive when current rates are below the loan rate; can be cheap or positive when above.
Yield maintenance (life co, agency, bank perm): present-value gap calculation. Expensive when current rates are below; floor at typically 1% of balance.
Declining penalty (agency option, some bank perm): scheduled penalty that declines over the loan term. Cheaper when rates are well below; pricier on the headline rate.
Open par window: typically the last 90 days of term. Free.
When to consider each funding source
Multifamily refi $5M+: agency default. Quote both Fannie and Freddie. Use HUD only if max leverage / max term economics dominate.
Same property at 65% to 75% LTV: CMBS. Higher leverage than life co.
Hotel, self-storage, mixed-use at 60% to 75%: CMBS, with selective life co engagement.
Smaller balance ($2M to $15M) with relationship bank: bank perm, often swap-fixed at competitive pricing.
Frequently asked questions
How do I know which source is best for my deal?
Run a parallel process. Quote 2 to 4 lenders from each plausible category. Compare on all-in cost (headline + closing costs amortized over hold + prepayment cost at exit), not just headline.
How long does permanent financing take to close?
Bank perm 45 to 75 days. Agency multifamily 60 to 120. CMBS 60 to 90. Life co 75 to 120. HUD 6 to 9 months. Add 1 to 4 weeks for parallel quoting at the front end.
Should I always quote multiple lender categories?
On any institutional perm deal, yes. Pricing varies day-to-day across categories. The discipline of a parallel process typically produces 25 to 75 bps of savings vs. direct-to-lender.
Sources
- Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations · Mortgage Bankers Association · 2026-Q1
- Capital Markets Special Report: Insurance Industry CRE Mortgage Holdings · National Association of Insurance Commissioners (NAIC) · 2025-Q4
- Financial Stability Report · Board of Governors of the Federal Reserve System · 2025-11
- Treasury Constant Maturity Series (DGS5, DGS10) · Federal Reserve Bank of St. Louis (FRED) · weekly