Conduit Loans

Conduit Loans: Complete Guide (2026)

Conduit loans are fixed-rate commercial mortgages that lenders originate, pool with other loans, and sell to investors as commercial mortgage-backed securities. Because the loan is destined for the bond market rather than a bank’s balance sheet, conduit lenders can offer long fixed terms, higher leverage than many banks, and non-recourse structures that most portfolio lenders won’t match.

These loans are built for income-producing commercial real estate: office, retail, industrial, multifamily, hotels, self-storage, and mixed-use properties that generate stable, documented cash flow. Typical loan sizes start around $2 million and run well into nine figures, which makes conduit financing a natural fit for owners of stabilized mid-size and larger assets.

A conduit loan makes the most sense when you want to lock a fixed rate for 5 to 10 years, maximize loan proceeds, and keep the debt off your personal balance sheet through non-recourse terms. It is less suitable if you plan to sell or refinance early, because prepayment restrictions are the product’s biggest trade-off. This guide covers how conduit loans commercial borrowers rely on actually work — the structure, requirements, current rates, and how to decide whether one fits your property.

What Is Conduit Loans?

A conduit loan is a commercial real estate mortgage originated specifically to be securitized. The lender — often an investment bank, a specialty finance company, or the CRE lending desk of a large commercial bank — acts as a “conduit” between the borrower and the capital markets. After closing, your loan is pooled with dozens of other commercial mortgages, placed into a trust, and sold to bond investors as CMBS loans (commercial mortgage-backed securities).

A few key terms define the product:

• Securitization — the process of pooling loans and selling bonds backed by their payments. This is what funds the loan and shapes its rules.
• Non-recourse — the lender’s remedy for default is the property itself, not your personal assets, except for “bad-boy carve-outs” (fraud, misappropriation, unauthorized transfers, bankruptcy filings).
• Master servicer and special servicer — after securitization, you no longer deal with your original lender. A master servicer handles routine payments and administration; a special servicer steps in only if the loan runs into trouble or you need a major modification.
• Defeasance — the standard way to exit a conduit loan early: you replace the property collateral with a portfolio of government securities that replicates the remaining loan payments.

The practical takeaway: conduit loans trade flexibility for pricing and proceeds. The standardized, bond-market-driven structure is exactly what enables long-term fixed rates and non-recourse terms — and exactly why the loan documents leave little room for negotiation after closing.

How Conduit Loans Work

Conduit loans follow a consistent structure because bond investors demand predictability. Here is what the typical loan looks like:

Feature	Typical Conduit Loan Structure
Loan term	5, 7, or 10 years (10 is most common)
Amortization	25–30 years, some interest-only periods available
Rate type	Fixed for the full term
Balloon payment	Yes — remaining balance due at maturity
Recourse	Non-recourse with bad-boy carve-outs
Prepayment	Lockout period, then defeasance or yield maintenance
Assumability	Usually assumable with lender approval and a fee (often 1%)
Reserves	Escrows for taxes, insurance, replacements, and often TI/LC

Pricing. The rate is set as a spread over an index — typically the swap rate or Treasury yield corresponding to the loan term. A 10-year conduit loan priced at a 250-basis-point spread over a 10-year swap rate of 4.00% would carry a 6.50% fixed rate. The rate locks at or near closing and never changes.

Amortization and the balloon. Because the amortization schedule (25–30 years) is longer than the loan term (5–10 years), a substantial balance remains at maturity. On a $5 million, 10-year loan with 30-year amortization at 6.5%, you would still owe roughly $4.24 million at the balloon. Every conduit borrower needs an exit plan — a sale or a refinance — well before maturity. Our commercial mortgage refinancing guide walks through how to time that refinance and what lenders will look for.

Interest-only options. Stronger deals (lower leverage, high-quality assets) frequently qualify for partial or even full-term interest-only payments, which boosts cash flow during the hold but leaves a larger balloon.

After closing. Your loan is transferred into a securitized trust within weeks or months. From that point, servicing rules — not a relationship banker — govern any request you make. Routine matters are simple; anything unusual (a partial release, a lease amendment on a major tenant, a transfer of ownership interests) goes through a formal servicer process with fees and review timelines.

Conduit Loans Requirements

Conduit lending is fundamentally asset-based. Underwriters care first about the property’s cash flow and quality, and second about the borrower. Typical requirements in 2026:

Property and cash flow

• DSCR minimum: 1.25x is the standard floor for most property types; hotels and other operationally intensive assets often need 1.40x–1.50x. Run your numbers through a DSCR calculator before applying — it is the single most important gating metric.
• Maximum LTV: 65%–75% for most stabilized properties. Multifamily and industrial tend to reach the top of that range; office and hotels are frequently capped at 60%–65% in the current market.
• Debt yield: Many conduit lenders also require a minimum debt yield (net operating income ÷ loan amount) of 8%–10%, which can constrain proceeds below the LTV cap on lower-cap-rate assets.
• Occupancy and stability: Generally 85%+ occupancy with a seasoned rent roll. Properties in lease-up or heavy renovation are better served by commercial bridge loans until they stabilize.

Borrower and sponsorship

• Net worth and liquidity: Sponsors typically need net worth equal to the loan amount or more, and liquidity of roughly 10% of the loan amount.
• Credit: A 680+ credit score is the common benchmark, but conduit underwriting is far more forgiving of personal credit than bank lending — the property carries the deal.
• Experience: Demonstrated ownership or management experience with the property type.
• Single-purpose entity: The borrower must be a bankruptcy-remote SPE (usually an LLC) that owns only the subject property.

Documentation

Expect to provide three years of property operating statements, a current rent roll, copies of major leases, personal financial statements for guarantors, and property tax and insurance records. The lender orders third-party reports — appraisal, Phase I environmental, and property condition assessment — which the borrower pays for (typically $10,000–$20,000 combined).

Current Conduit Loans Rates

As of early 2026, conduit loan rates for stabilized commercial properties generally fall in these ranges:

Loan Profile	Typical Fixed Rate Range
10-year, ≤65% LTV, strong asset (multifamily/industrial)	5.75% – 6.50%
10-year, 70–75% LTV, standard profile	6.25% – 7.00%
5- or 7-year terms	6.00% – 7.00%
Hotels, office, and higher-risk profiles	6.75% – 7.75%+

Rates are quoted as a spread — commonly 200 to 350 basis points — over the corresponding swap or Treasury rate, so they move daily with the bond market. The factors that push your pricing within (or outside) these ranges:

• Leverage: Every step down in LTV tightens the spread. A 60% LTV loan may price 40–75 basis points inside a 75% LTV loan on the same asset.
• Property type: Multifamily, industrial, and grocery-anchored retail earn the tightest spreads; office and hospitality pay the widest.
• Debt yield and DSCR cushion: More cash-flow cushion means better pricing and better odds of interest-only.
• Market: Primary-market assets price inside secondary and tertiary markets.
• Tenancy: Long leases to credit tenants compress spreads; near-term rollover widens them.

Because conduit spreads are set by bond investors rather than any one lender’s appetite, quotes from different conduit shops on the same deal can vary meaningfully — which is precisely why comparing multiple lenders matters. Use a commercial mortgage calculator to translate quoted rates into monthly payments and balloon balances so you’re comparing real numbers, not just headline rates.

Pros and Cons

Pros	Cons
Non-recourse — personal assets protected outside bad-boy carve-outs	Rigid prepayment: lockout, then defeasance or yield maintenance
Fixed rates for 5–10 years, insulating you from rate volatility	Little post-closing flexibility; servicer approval needed for changes
Higher leverage than many banks (up to 75% LTV)	Balloon payment requires a planned exit
Asset-based underwriting — property cash flow outweighs personal credit	Closing costs run higher ($30,000+ including legal and third-party reports)
Interest-only periods available on stronger deals	Required escrows and reserves reduce effective cash flow
Assumable, which can help when selling in a high-rate environment	Loan sizes below ~$2 million rarely qualify
Consistent, standardized process across lenders	You lose the relationship — servicing is impersonal by design

The honest summary: conduit loans are excellent at what they’re designed for — long-term, fixed-rate, non-recourse financing on stabilized assets — and genuinely painful if your plans change mid-term. Defeasance costs in particular can run into the hundreds of thousands of dollars if rates have fallen since closing.

When to Choose Conduit Loans

Conduit financing is the right tool in specific situations:

You plan to hold long-term. An investor with a stabilized 150-unit apartment property and a 10-year hold horizon is the classic conduit borrower: they lock a fixed rate, take non-recourse protection, and never touch the prepayment problem because they hold to maturity.

You need maximum proceeds on a cash-out refinance. Conduit lenders routinely allow cash-out at closing where banks hesitate. An owner who bought a shopping center at a discount, re-leased it, and wants to pull equity for the next acquisition can often extract more capital through a conduit execution.

You want off-balance-sheet, non-recourse debt. Sponsors with multiple properties and partners often prefer conduit loans because no single deal puts personal guarantees at risk or clutters their contingent liability schedule.

Your bank said no — but the property performs. Borrowers with a past credit event, foreign nationals, or complex ownership structures frequently qualify for conduit loans on the strength of the asset alone.

Conduit loans are the wrong choice when the property isn’t stabilized (use a bridge loan and refinance once occupancy and NOI support permanent debt), when you may sell within 2–3 years (the defeasance math rarely works), or when the loan is under about $2 million (banks, credit unions, and agency small-balance programs will be more efficient). If you’re weighing a shorter-term or floating-rate alternative, compare the numbers side by side before committing — the cheapest rate isn’t always the cheapest loan once prepayment costs enter the picture.

How to Apply

The conduit process is standardized, which makes it predictable — typically 45 to 60 days from application to closing. Here’s how it works through RefiLoop:

1. Get matched and compare quotes. Share your property details, current debt, and goals. RefiLoop matches your deal against its network of 7,000+ lenders — including conduit desks, banks, agencies, and debt funds — so you see competing term sheets rather than a single quote.
2. Sign the application and fund third-party reports. Once you select a term sheet, you’ll sign the loan application, post a deposit, and the lender orders the appraisal, environmental report, and property condition assessment.
3. Underwriting and rate lock. The lender underwrites the property’s cash flow, reviews leases and financials, and sizes final proceeds. Rate typically locks at or just before closing; some lenders offer early lock for a fee.
4. Legal documentation and closing. Counsel finalizes the SPE structure and loan documents, escrows are established, and the loan funds. Have your document checklist complete before step two — operating statements, rent roll, leases, and sponsor financials ready to go can shave weeks off the timeline.

Ready to see what conduit lenders would offer on your property? See If You Qualify — it takes a few minutes and doesn’t affect your credit.

Frequently Asked Questions

What are current conduit loan rates?

As of early 2026, conduit loans generally price between roughly 5.75% and 7.75% fixed, depending on leverage, property type, market, and loan term. Rates are set as a spread over swap or Treasury rates, so they move with the bond market daily. See the rates section above for detailed ranges — and remember that rates vary by property, borrower, and market conditions, so competing quotes are the only way to know your real number.

How long does a conduit loan take to close?

Typically 45 to 60 days from signed application to funding. The longest lead items are the third-party reports (appraisal, environmental, property condition) and legal documentation of the single-purpose entity. Borrowers who assemble their financials and rent roll up front consistently close faster. See the application process section above for the step-by-step timeline.

What is the maximum LTV on a conduit loan?

Most conduit lenders cap leverage at 75% LTV for stabilized multifamily and industrial properties, with 65%–70% more common for retail, office, and hotels in the current market. Debt yield and DSCR tests can constrain proceeds below the LTV cap, so the property’s cash flow — not just its appraised value — determines what you can actually borrow.

Can I pay off a conduit loan early?

Yes, but at a cost. Conduit loans include a lockout period (usually 2 years after securitization) during which prepayment is prohibited, followed by defeasance or yield maintenance for most of the remaining term. Defeasance means purchasing government securities that replicate the loan’s remaining payments, which can be expensive when rates have fallen. Most loans allow penalty-free prepayment only in the final 3–6 months before maturity.

What credit score do I need?

680+ is typical for conventional approval, but commercial real estate lending is primarily asset-based. The property’s cash flow — measured by DSCR — matters far more than personal credit. Conduit lenders in particular will look past credit blemishes when the property demonstrates strong, stable income and the sponsor meets net worth and liquidity benchmarks.

What are the minimum requirements for a conduit loan?

Plan on a stabilized property with at least 1.25x DSCR, leverage at or below 75% LTV, a loan amount of $2 million or more, sponsor net worth roughly equal to the loan amount, and liquidity near 10% of the loan amount. You’ll also need to close in a single-purpose entity and fund escrows for taxes, insurance, and replacement reserves.

—

Every conduit desk prices the same deal differently, and the spread between the best and worst quote can mean tens of thousands of dollars a year. RefiLoop puts your property in front of a network of 7,000+ lenders — conduit, bank, agency, and private — so you can compare real term sheets and choose with confidence. Get your custom quote today and see what your property qualifies for.