Permanent Loans

Permanent commercial loans are the long-term, stabilized financing that most income-producing properties eventually graduate into. If a construction loan builds the property and a bridge loan repositions it, the permanent loan is where the asset settles down: a fixed or floating rate, a 5- to 30-year term, and predictable monthly payments backed by the property’s own cash flow. This guide is written for commercial real estate owners and investors who are either refinancing out of short-term debt, taking out a maturing balloon, or purchasing a stabilized property and want the most durable capital structure available.

Permanent financing is the right conversation to have when your property is leased, cash-flowing, and no longer needs heavy capital improvements. It is typically the cheapest debt in commercial real estate because lenders are underwriting a proven income stream rather than a business plan. In 2026, with hundreds of billions of dollars in commercial mortgages maturing and rates still well above the pandemic-era lows many owners locked in, the permanent loan market is where most refinance decisions are being made. Below, we cover how these loans are structured, what lenders require, where rates sit today, and how to decide whether a permanent loan — or an alternative like bridge or CMBS debt — fits your situation.

What Is a Permanent Loans?

A permanent commercial loan (often just called a “perm loan” or “permanent mortgage”) is long-term financing secured by a stabilized, income-producing commercial property. “Permanent” does not mean forever — it means the loan is not transitional. It replaces short-term debt such as construction or bridge financing and is designed to stay in place for years, repaid from the property’s rental income.

A few key terms you’ll encounter:

• Stabilized property: An asset that is substantially leased (typically 85–90%+ occupancy) at market rents, with a documented operating history — usually at least 90 days to 12 months of steady performance.
• Amortization: The schedule over which principal is repaid, commonly 25–30 years for commercial perm loans.
• Term: How long the loan actually runs before it matures — often shorter than the amortization, which creates a balloon payment.
• DSCR (debt service coverage ratio): Net operating income divided by annual debt service. This is the single most important underwriting metric for permanent debt.
• Loan-to-value (LTV): The loan amount as a percentage of the appraised property value.

Permanent loans are offered by banks, credit unions, life insurance companies, agency lenders (Fannie Mae and Freddie Mac for multifamily), CMBS conduit lenders, and some debt funds. Each source prices and structures the loan differently, which is exactly why comparing multiple lenders matters.

How Permanent Loans Work

The defining feature of a permanent loan is the mismatch — or match — between term and amortization.

Term and amortization. A typical bank perm loan might carry a 5-, 7-, or 10-year term with a 25-year amortization. Your monthly payment is calculated as if you were paying the loan off over 25 years, but the loan matures much sooner. At maturity, the remaining principal comes due as a balloon payment, which most borrowers handle by refinancing or selling. Life insurance companies and agency lenders often offer longer terms — 10, 15, even 25–30 years — and some offer fully amortizing structures with no balloon at all.

Rate type. Most permanent loans are fixed-rate for the initial term, which is the main reason borrowers choose them: payment certainty. Common structures include:

• Fixed for the full term (e.g., 10-year fixed, 30-year amortization) — standard for agency, life company, and CMBS loans.
• Fixed-then-adjustable (e.g., 5 years fixed, then resets or floats) — common at banks and credit unions.
• Floating rate over SOFR plus a spread — less common for perm debt but available, sometimes with an interest rate cap.

Pricing. Fixed rates are generally quoted as a spread over an index — the corresponding U.S. Treasury yield for most fixed-rate perm loans, or SOFR for floaters. A lender might quote “275 basis points over the 10-year Treasury,” and your final rate is set at rate lock.

Recourse. Bank perm loans are often full or partial recourse (you personally guarantee repayment). Agency, life company, and CMBS loans are typically non-recourse with standard “bad-boy” carve-outs for fraud or misconduct.

Escrows and covenants. Expect lenders to require tax and insurance escrows, and sometimes replacement reserves. Some loans carry ongoing DSCR or occupancy covenants tested annually.

If you’re weighing a perm loan against conduit financing, our guide to CMBS loans breaks down how securitized permanent debt differs from balance-sheet lending.

Permanent Loans Requirements

Permanent lenders underwrite the property first and the borrower second. Here’s what they generally look for in 2026:

Requirement	Typical Range
Minimum DSCR	1.20x–1.35x (1.25x is the most common floor)
Maximum LTV	65%–80% (75% is typical; multifamily agency up to 80%)
Occupancy	85%–90%+ stabilized, with 3–12 months of history
Credit score	680+ preferred; property performance weighs more
Net worth	Often equal to the loan amount
Liquidity	6–12 months of debt service post-closing
Property types	Multifamily, office, retail, industrial, self-storage, mixed-use, some hospitality

DSCR is the gatekeeper. If your property produces $500,000 in net operating income and the lender requires a 1.25x DSCR, your maximum annual debt service is $400,000 — which caps your loan amount regardless of LTV. Run your own numbers with our DSCR calculator before you apply; it’s the fastest way to know whether your target loan amount is realistic.

Documentation. Expect to provide:

• 2–3 years of property operating statements and a trailing-12-month P&L
• Current rent roll with lease terms
• 2–3 years of personal and entity tax returns
• Personal financial statement and schedule of real estate owned
• Property details: photos, capital improvements, environmental and engineering reports (lender-ordered)
• Entity documents (operating agreement, formation docs)

Conservative property types and strong sponsors get the best terms. Special-purpose properties (car washes, self-storage in tertiary markets, hospitality) face lower LTVs and higher DSCR floors.

Current Permanent Loans Rates

As of 2026, permanent commercial loan rates generally fall in these ranges. Treat them as directional — actual pricing depends on the property, market, leverage, and lender type:

Lender Type	Typical Fixed Rate Range (2026)	Typical Terms
Life insurance companies	5.50%–6.50%	10–30 yr, low leverage (≤65% LTV)
Agency (Fannie/Freddie, multifamily)	5.50%–6.75%	5–30 yr, up to 80% LTV
Banks / credit unions	6.00%–7.25%	5–10 yr term, 25-yr amortization
CMBS conduit	6.00%–7.50%	5–10 yr, interest-only available
Debt funds / non-bank	7.00%–9.00%+	Flexible, higher leverage

What moves your rate:

• Leverage: Every step down in LTV (say, from 75% to 65%) typically improves pricing. Low-leverage deals attract life company money, the cheapest in the market.
• Property type: Multifamily and industrial price tightest; office and hospitality carry premiums in the current market.
• DSCR cushion: A 1.40x deal prices better than one scraping by at 1.20x.
• Term and index: 5-year money and 10-year money price off different points on the Treasury curve.
• Market and asset quality: Primary-market, newer-vintage assets beat tertiary-market, older stock.
• Sponsor strength: Net worth, liquidity, experience, and credit all factor in.

Because spreads vary widely between lender types — often 100+ basis points for the same deal — getting quotes from multiple capital sources is the single highest-leverage move a borrower can make. Use our commercial mortgage calculator to see how a 50 basis point difference changes your monthly payment and total interest over the term.

Pros and Cons

Permanent loans are the workhorse of commercial real estate finance, but they’re not right for every situation.

Pros	Cons
Lowest rates available for stabilized CRE	Requires a stabilized, cash-flowing property — no heavy transitional deals
Long-term payment certainty with fixed rates	Balloon payment at maturity on most bank structures
Amortization builds equity every month	Prepayment penalties can be severe (yield maintenance, defeasance)
Non-recourse available (agency, life co, CMBS)	Slower to close than bridge debt — 45–90 days
Terms up to 25–30 years from some lenders	Locked-in leverage: hard to pull cash out later without refinancing
Frees you from rate risk during the term	Extensive documentation and third-party reports

The prepayment issue deserves emphasis. Many fixed-rate perm loans — especially CMBS and agency — carry yield maintenance or defeasance provisions that can make early payoff very expensive. If you expect to sell or refinance within 2–3 years, a permanent loan with a 10-year lockout is the wrong tool, even at a great rate.

When to Choose Permanent Loans

Permanent financing is the best fit when the property is stable and your hold period matches the loan term. Common scenarios:

Refinancing a maturing balloon. Your 5-year bank loan from 2021 is coming due. The property is 95% leased and cash flow has grown. A new perm loan locks in today’s rate for another 5–10 years. Our commercial mortgage refinancing guide walks through timing, costs, and the full refinance process.

Taking out a bridge or construction loan. You bought a 70%-occupied retail center with bridge debt, re-tenanted it, and now sit at 93% occupancy with 12 months of stabilized income. A perm loan pays off the bridge at a substantially lower rate. (If you’re on the other side of this journey — the property isn’t stabilized yet — commercial bridge loans remain the right tool until it is.)

Long-term hold purchases. You’re buying a stabilized industrial building you plan to hold for 10+ years. A 10-year fixed perm loan with a 30-year amortization gives you a decade of payment certainty.

Cash-out refinancing. Your multifamily property has appreciated significantly. A perm refinance at 70–75% LTV lets you pull out tax-efficient equity for the next acquisition while keeping payments manageable.

When a permanent loan is the wrong choice: the property needs significant lease-up or renovation, you plan to sell within a couple of years, or you need to close in two weeks. Bridge debt handles the first two; hard money handles the third.

How to Apply

The permanent loan process typically takes 45–90 days from application to closing. Here’s how it works with RefiLoop:

Step 1: Get a quote and pre-qualify (Day 1–3). Tell us about your property, loan amount, and goals. We match your deal against our 7,000+ lender network — banks, credit unions, agencies, life companies, and CMBS lenders — and come back with real options, not a single take-it-or-leave-it term sheet.

Step 2: Compare term sheets and select a lender (Week 1–2). Review rates, terms, amortization, recourse, and prepayment structures side by side. We help you weigh the trade-offs — the lowest rate isn’t always the best loan.

Step 3: Underwriting and third-party reports (Week 3–8). Submit your documentation package (rent roll, operating statements, tax returns — see our document checklist to get organized before you apply). The lender orders the appraisal, environmental Phase I, and property condition report.

Step 4: Commitment, rate lock, and closing (Week 8–12). Once underwriting clears, you receive a loan commitment, lock your rate, and close. Funds pay off your existing debt, and your new permanent loan takes effect.

Ready to see real numbers on your property? See If You Qualify — it takes minutes and doesn’t affect your credit.

Frequently Asked Questions

What are current permanent commercial loan rates?

As of 2026, fixed rates on permanent commercial loans generally range from roughly 5.50% to 7.50% depending on lender type, with life insurance companies and agency multifamily lenders at the low end and CMBS and debt funds higher. See the rates section above for the full breakdown — pricing varies by property type, leverage, DSCR, market, and borrower strength, so quotes on the same deal can differ by 100 basis points or more between lenders.

What is the maximum LTV on a permanent loan?

Most permanent lenders cap leverage at 65–80% of appraised value. Banks and life companies typically top out at 65–75%, while agency multifamily loans can reach 80%. Your actual loan amount is often constrained by DSCR before LTV — the property’s cash flow must support the payment at a 1.20x–1.35x coverage ratio.

How long does a permanent loan take to close?

Plan on 45–90 days from application to funding. Bank loans on straightforward deals can close in 45–60 days; agency, life company, and CMBS executions often run 60–90 days because of third-party reports and securitization requirements. Having your rent roll, operating statements, and tax returns organized up front is the biggest thing you can do to speed the process.

What credit score do I need for a permanent commercial loan?

A personal credit score of 680+ is typical for conventional permanent financing, but commercial lending is primarily asset-based. The property’s cash flow — measured by DSCR — matters more than your personal credit. Strong property performance can offset a middling score, though scores below roughly 650 will narrow your lender options and may push you toward higher-rate capital.

Do permanent loans have prepayment penalties?

Usually, yes. Bank loans often use step-down penalties (e.g., 5-4-3-2-1% of the balance by year). CMBS loans typically require defeasance, and agency and life company loans commonly use yield maintenance — both of which can be expensive if rates have fallen since you closed. If early sale or refinance is possible, negotiate the prepayment structure before you commit, not after.

Can I get a permanent loan on a property that isn’t fully leased?

Generally, no. Permanent lenders want stabilized occupancy — usually 85–90%+ with several months of proven income. If your property is in lease-up or mid-renovation, bridge financing is the standard path: stabilize the asset first, then refinance into permanent debt at a lower rate.

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Permanent loan pricing varies more between lenders than most borrowers realize — the difference between an average quote and the best quote on a $5 million loan can be tens of thousands of dollars a year. RefiLoop compares your deal across a network of 7,000+ banks, credit unions, agency lenders, life companies, and CMBS shops so you see your real options in one place. Get your custom quote today and see if you qualify.