Why so many owners are refinancing now
A large share of commercial debt is coming due. According to the Mortgage Bankers Association, 17% ($875 billion) of the $5.0 trillion of outstanding commercial mortgages held by lenders and investors is scheduled to mature in 2026, including 13% of mortgages backed by multifamily properties. (MBA, February 2026) When a loan matures, the owner has to pay it off — usually by refinancing.
Four reasons to refinance a commercial property
| Goal | What the refinance does | Watch for |
|---|---|---|
| Rate-and-term | Replaces the loan with a new rate, term, or amortization to lower or stabilize the payment. | Prepayment penalties on the current loan; whether the new payment actually beats the old one. |
| Maturing or balloon loan | Pays off a loan that is coming due with a new long-term loan. | Start early — appraisal and title take time, and a missed maturity date gets expensive. |
| Bridge or hard-money exit | Moves a renovated, now-rented property from a short-term loan into a loan of up to 30 years. | Lenders look for a stabilized property: repairs done, tenants in place, rent coming in. |
| Cash-out | Borrows against built-up equity to fund the next purchase, repairs, or other business needs. | Cash out is capped by loan-to-value, and the property’s income must still cover the larger payment. |
What lenders look at
Loan-to-value (LTV)
LTV is the loan amount divided by the property’s appraised value. We lend up to 75% LTV on most stabilized properties; the exact figure depends on the property type and its condition.
Debt-service coverage ratio (DSCR)
DSCR compares the property’s net operating income (NOI) to the annual loan payments: DSCR = NOI ÷ annual debt service. A DSCR above 1.0 means the property earns more than the loan costs each year. DSCR programs use this, instead of your personal income, to qualify the loan — which is why many need no tax returns.
Credit, property, and location
Credit is considered from a 500 FICO. Lenders also weigh occupancy, the condition of the building, and whether the appraiser can find comparable sales nearby — properties in very rural areas with few comparable sales are harder to finance.
A worked example
Illustrative numbers only — not a quote or a commitment to lend.
Property: a 12-unit apartment building appraised at $1,200,000, with $450,000 left on a loan that matures next year.
Maximum new loan: 75% × $1,200,000 = $900,000.
Cash out: $900,000 − $450,000 payoff = about $450,000, before closing costs.
Income check: if the building’s NOI is $96,000 a year and the new loan’s payments are $76,800 a year, the DSCR is 96,000 ÷ 76,800 = 1.25 — the property covers its payments with room to spare.
Properties we refinance
- Apartment buildings (5+ units) and multifamily
- Mixed-use
- Retail and strip centers / shopping centers
- Office and medical office
- Light industrial, flex space, and warehouse / distribution
- Automotive repair shops and senior housing / assisted living
- 1–4 unit residential investment property
What we don’t finance
Owner-occupied primary residences, raw or vacant land, ground-up construction, hotels and resorts, houses of worship, and car dealerships. If you’re not sure where your property fits, send the details and we’ll tell you quickly.
Documents to have ready
- Your current loan statement and payoff amount
- Rent roll and copies of the leases
- Trailing 12-month operating statement (income and expenses)
- Entity documents for the borrowing LLC or corporation, including its EIN
- Property insurance details and recent photos, plus any planned repairs
How the process works
- Quick quote. Tell us about the property, the current loan, and what you want to achieve.
- Terms. We review the numbers with you and outline the loan amount and structure.
- Appraisal and title. The property is appraised and the title is checked.
- Underwriting. We confirm the income, the property, and the borrowing entity.
- Closing. Your old loan is paid off and any cash out is funded — often in under 3 weeks.
Frequently asked questions
- How much cash can I take out in a commercial cash-out refinance?
- The new loan is sized at up to 75% of the property's appraised value on most stabilized properties. Your cash out is roughly that amount minus the payoff of your current loan and closing costs. A property appraised at $1,000,000 with a $400,000 balance could support a loan of up to $750,000 — about $350,000 before costs.
- Do I need tax returns to refinance a commercial property?
- Not on many programs. DSCR (debt-service coverage ratio) loans qualify the loan on the property’s rental income rather than your personal income, so tax returns, W-2s, and pay stubs are not required. You will still provide property documents such as a rent roll, leases, and an operating statement.
- What credit score do I need for a commercial refinance?
- Credit is considered from a 500 FICO. Because the loan leans on the property's value and cash flow, a strong property can carry the loan even when personal credit is imperfect — higher scores generally get better pricing.
- Can I refinance out of a hard money or bridge loan?
- Yes — it is one of the most common reasons to refinance. Once a property is stabilized (repairs finished, tenants in place, rent coming in), a long-term loan of up to 30 years can replace the short-term, higher-rate bridge or hard-money loan before it matures.
- How long does a commercial refinance take?
- Often under 3 weeks from application to closing when the property documents are ready. The appraisal and title work are usually the longest steps, so having your rent roll, leases, operating statement, and current loan statement on hand speeds things up.
- Which states does New City Financial lend in?
- We finance business-purpose investment and commercial property in 40 states plus Washington, DC. We do not currently lend in Alaska, Hawaii, Minnesota, Mississippi, Montana, North Carolina, North Dakota, South Dakota, Vermont, West Virginia, or in Chicago/Cook County, Detroit, or Baltimore.
- Can I refinance my home or a property I live in?
- No. These are business-purpose loans for investment and commercial property. A primary residence is not eligible — including a building where you live in one of the units.