A commercial property mortgage rate is built from two parts: a benchmark index plus a credit spread the lender sets for the risk of your deal. The index comes from public market rates the lender does not control. The spread, which across the commercial market typically runs 1.5% to 4%, is where pricing is won. Five factors move that spread, and the loan program sets the starting point. This page explains how lenders price a commercial mortgage, what current rates depend on, and how a private lender prices a deal a bank will decline.
Key takeaways
- A commercial mortgage rate equals a benchmark index (Treasury or SOFR) plus a credit spread, which across the market generally runs 1.5% to 4%.
- Five factors move the spread: LTV, DSCR, property type, borrower experience, and loan term.
- Commercial loans run shorter than residential, usually 5 to 25 years, often with a balloon.
- SBA 504 rates tie to the 10-year Treasury and stay fixed for the life of the loan.
- Fidelity, a private lender since 1971, qualifies on property value at or below 50% LTV and funds in as little as 10 business days.
How Commercial Property Mortgage Rates Are Set
A commercial property mortgage rate equals a benchmark index plus a credit spread, set per deal during underwriting. The index sets the floor. The spread sets the risk premium.
Fixed-rate loans price off the matching U.S. Treasury yield: a 5-year loan tracks the 5-year Treasury, and a 10-year loan tracks the 10-year. The U.S. Treasury publishes these yields daily on its par yield curve. Floating-rate and bridge loans price off SOFR, the Secured Overnight Financing Rate the New York Fed calculates each day from Treasury repo transactions. SOFR replaced LIBOR in 2023.
The spread carries the risk. Across the commercial market it generally runs 1.5% to 4% over the index, widening or narrowing with the deal. A stabilized apartment building with strong cash flow secures a tighter spread, while a special-use property with uncertain income draws a wider one.
Three rate structures cover most commercial loans:
- Fixed: locked for the term, priced over the Treasury yield.
- Floating: resets periodically at SOFR plus a fixed margin.
- Hybrid: fixed for an opening period, then floating for the balance.
The index and structure set the starting point. The loan program decides how far above the benchmark the rate begins.
Current Commercial Property Mortgage Rates by Loan Type
Commercial mortgage rates vary by loan program, property type, and borrower strength, so no single figure fits every deal. As a benchmark, the U.S. Treasury reported the 10-year yield in the low-to-mid 4% range in mid-June 2026, and most fixed commercial rates price 1.5% to 4% above that. Confirm the live figure through the Treasury and Federal Reserve H.15 releases linked below, because the benchmark moves daily.
Five loan programs cover most commercial property financing:
| Loan program | How the rate is set | Typical term |
| Bank / portfolio (private lender) | Treasury or internal cost of funds plus a relationship-priced spread | 3 to 10 years, often with a balloon |
| Multifamily agency (Fannie Mae, Freddie Mac) | Tightest spreads in the market for stabilized multifamily | 5 to 30 years |
| CMBS (securitized) | Priced for loans pooled and sold to bond investors | 5 to 10 years, often a balloon on a 25 to 30 year amortization |
| SBA 504 | CDC portion tied to the 10-year Treasury, fixed for the life of the loan | 10, 20, or 25 years |
| SBA 7(a) | A base rate (Prime, SOFR, or Treasury) plus a lender spread, within SBA caps | Up to 25 years |
According to the SBA, the agency does not set the loan rate directly. For a 504 loan, the CDC-portion rate ties to the 10-year Treasury and stays fixed for the life of the loan, and SBA guarantee, CDC servicing, and central servicing fees compound into the effective rate. For a 7(a) loan, the lender sets a base rate plus a spread, capped by SBA limits.
Program choice sets the floor. Your deal then moves the rate up or down from there.
What Determines Your Commercial Mortgage Rate
Five factors move a commercial mortgage rate above its benchmark:
- Loan-to-value (LTV): a lower LTV secures a lower rate, because less leverage exposes the lender to less risk. A loan at 50% LTV prices below one at 75%.
- Debt service coverage ratio (DSCR): lenders measure net operating income against the loan payment. A DSCR of 1.25x is a common industry floor, and stronger coverage secures better pricing.
- Property type: asset classes carry different risks. Multifamily and well-leased retail prices are tighter than hotels, restaurants, or special-use buildings.
- Borrower experience: a track record of performing loans narrows the spread, while a first purchase widens it.
- Loan term and amortization: longer fixed terms generally carry higher rates, and the amortization schedule sets the monthly payment.
These factors compound. Low leverage on a stabilized property held by a seasoned borrower can secure a rate well below a weaker deal sharing the same benchmark.
Commercial vs. Residential Mortgage Rates
Commercial mortgage rates run higher and use shorter, balloon-heavy terms tied to property income, whereas residential rates run lower and amortize fully over terms up to 30 years tied to borrower income. The gap comes from risk and structure, not lender preference.
| Attribute | Commercial mortgage | Residential mortgage |
| Rate level | Higher | Lower |
| Typical term | 5 to 25 years, often with a balloon | Up to 30 years, fully amortizing |
| Amortization | Term often shorter than the amortization period | Term equals the amortization period |
| Qualification basis | Property income and value (DSCR, LTV) | Borrower income and credit |
A common myth holds that commercial loans offer easy 30-year terms. Most run 5 to 25 years, and many carry a balloon. For example, a 10-year term on a 25-year amortization schedule leaves the remaining balance due at year 10. The shorter horizon and balloon risk are part of why commercial rates sit above residential.
How Private Lenders Price Commercial Mortgage Rates
Private lenders price commercial mortgages on the same core inputs as banks, then weight them toward the property. Every lender prices on an index plus a spread and weighs LTV and DSCR.
Fidelity Mortgage Lenders, a private lender operating since 1971, qualifies the loan primarily on property value rather than borrower income or credit score, applies no minimum credit score, holds commercial LTV at or below 50%, and funds in as little as 10 business days. Fidelity also accepts seller financing when the borrower holds at least 25% cash in the deal, an option only some private lenders allow.
Conservative LTV is a feature, not a limit. In the context of risk, a lower loan-to-value gives the lender a margin of safety, which is what lets Fidelity fund quickly and underwrite deals a bank declines.
Qualifying for a Lower Commercial Mortgage Rate
You secure a lower commercial mortgage rate by reducing the lender’s risk. Four steps move your rate:
- Strengthen DSCR. Grow net operating income, or size the loan so income covers the payment with room to spare.
- Lower your LTV. More equity shrinks the loan against the property and tightens the spread.
- Match the program to the asset. A 504 loan suits owner-occupied real estate, while an agency loan suits stabilized multifamily.
- Document cash flow. Clean rent rolls and operating statements let an underwriter price the deal with confidence.
When a Private Commercial Loan Makes Sense
A private commercial loan makes sense when speed or flexibility outweighs the lowest possible rate. Bank underwriting can take weeks and declines deals outside standard guidelines. A private lender that qualifies on property equity can fund a purchase, refinance, or time-sensitive deal far faster. To weigh the options for your property, see Fidelity’s commercial real estate loan programs.
Talk to Fidelity About Your Commercial Loan
A commercial property mortgage rate comes down to a benchmark index plus a credit spread, moved by LTV, DSCR, property type, and term. The program sets the floor, and the strength of the deal sets the spread. The next question for most borrowers is how fast a loan can close. Fidelity Mortgage Lenders, lending since 1971, funds private commercial loans across California, Colorado, Idaho, Montana, Oregon, Texas, Utah, and Washington, and can discuss loans in Nevada, with many deals closing in as little as 10 business days. To see what your property qualifies for, contact Fidelity at (800) 752-9533 or apply online.
Frequently Asked Questions
How are commercial mortgage rates calculated?
A commercial mortgage rate is a benchmark index plus a credit spread. Fixed rates price over the matching Treasury yield, floating rates over SOFR, and the spread reflects the risk of the specific loan.
Are commercial mortgage rates higher than residential?
Yes. Commercial loans carry higher rates and shorter terms because they finance income property, often without a government guarantee, and frequently include a balloon payment.
What is the typical term on a commercial mortgage?
Most commercial mortgages run 5 to 25 years. Many use a balloon structure, such as a 10-year term on a 25-year amortization schedule.
What is a good DSCR for a commercial mortgage?
A DSCR of 1.25x is a common industry minimum, meaning net operating income covers the loan payment 1.25 times. Stronger coverage secures better pricing.
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