What are Apartment Loan Rates in 2019?

Apartment Financing Rates in 2019: What You Need to Know

Alex Kerrigan
Published in
5 min readJul 9, 2019


Apartment loan rates in 2019 are hitting historic lows, making it a great market for investors.

If you’re looking to take out an apartment loan, it’s never been a better time. As of July 2019, interest rates are continuing to fall, with rates for many types of commercial and multifamily real estate loans currently sitting at less than 4% (as of 7/9/2019). This can be incredibly advantageous for investors, especially those who want to take out long-term, fixed-rate apartment financing via products such as Fannie Mae Multifamily or Freddie Mac Optigo loans, or HUD’s 223(f) or 221(d)(4) loan programs.

Apartment Building Financing Rates by Loan Type

Now, we’ll review current rate information for some of the most important types of multifamily loans. It’s important to keep in mind that rates change on a daily basis, so the information we provide is unlikely to be fully accurate — but will still give you a good idea of current rates.

Bank Loans: LIBOR + 1.18%-3.20%

Bank apartment loans, offered by local, regional, or national banks, are typically full-recourse financial products. While they can come in a variety of term lengths and amortizations, they are most commonly offered in a 5/25 configuration, with a 5-year loan term and a 25-year amortization. The net worth and credit score of borrowers will be strictly analyzed during the underwriting process, and leverage typically tops out at 70–75%.

As to be expected, shorter-term loans, such as 3/25 loans, are less expensive, currently ranging from 1.18% — 2.03% above LIBOR for fixed-rate loans and 1.20% — 2.20% above LIBOR for adjustable rate loans. In contrast, 10-year fixed rate bank financing ranges from 1.43% — 2.28% above LIBOR for fixed-rate loans and 1.20% — 3.20% above LIBOR for adjustable rate loans. Since interest rates are currently so low, adjustable rate loans are actually less expensive than fixed-rate financing, as institutions believe rates are likely to increase in the near future.

CMBS Financing: LIBOR +1.09% — 2.73%

CMBS financing is provided by lenders who make loans, pool them together, and sell the resulting product (a commercial mortgage-backed security) to investors on the secondary market. CMBS loans are generally non-recourse with standard “bad boy” carve-outs. This type of apartment financing is typically more asset-based, meaning that the net worth and credit score of borrowers is not scrutinized as heavily as, say, a borrower applying for bank financing.

Currently, CMBS loan rates are ranging from 1.09% — 2.54% above LIBOR for 5-year loans, 1.11% — 2.61% over LIBOR for 7-year loans, and 1.18% — 2.73% over LIBOR for 10-year loans.

Despite their benefits, CMBS loans can be tricky for some borrowers, as they are not serviced by the original lender. Instead, they are serviced by a Master Servicer, and, if a borrower cannot keep up with their payments, the loan may be sent to a Special Servicer. All of this means that CMBS borrowers may be more likely to face foreclosure or other negative consequences if they default on their loan, as they cannot negotiate directly with their lender for assistance.

Fannie Mae and Freddie Mac Multifamily Loans: Sub 4% — 5%

Fannie Mae and Freddie Mac are government-sponsored enterprises which offer some of the lowest-priced apartment loans on the market today. These loans are offered by private lenders, with the guarantee that they will be purchased by Fannie or Freddie post-closing. Like CMBS loans, most Fannie Mae and Freddie Mac loans are securitized and sold as bonds on the secondary market. While many of these loans are partially amortizing, a few are fully-amortizing financial products. Leverage often ranges up to 85%.

In addition to offering standard multifamily loans, Fannie and Freddie also offer customized products designed for student housing, cooperative apartments, senior living/healthcare, and affordable housing. In fact, since Fannie Mae and Freddie Mac offer such a wide variety of apartment financing products, it’s somewhat more difficult to provide an exact interest rate range for these loans.

Life Insurance Company Loans: 3.120% — 4.910%

Life insurance companies are typically understood to offer loans with the best interest rates on the market, though these loans can be quite difficult to qualify for. Life companies are generally only willing to finance Class A apartment properties in major MSAs (think New York City, Los Angeles, Chicago, or Miami). They also typically prefer highly experienced investors with a lot of experience doing similar deals. Leverage typically trends somewhat lower than bank financing, with average LTVs ranging from 55% to 70%. Unlike most other types of financing (with the exception of HUD/FHA multifamily loans), life insurance companies sometimes offer terms of up to 25–30 years.

For 5-year loans, rates currently range from 3.120% — 3.720%, for 7-year loans, they range from 3.190% — 4.040%, for 10-year loans, they range from 3.310% — 4.410%, and for 20 to 30-year loans, rates currently range from 3.560% — 4.910%.

HUD Multifamily Loans: 10-Year UST + 0.64%–1.64%

Much like life company loans, HUD multifamily loans offer extremely competitive rates and are somewhat difficult to be approved for. However, HUD/FHA apartment loans have even more generous terms than life company financing, with their HUD 223(f) program for acquisitions and refinancing offering a 35-year fully amortizing loan term. In addition, HUD’s flagship apartment construction loan, the HUD 221(d)(4), offers 40-years fixed and fully amortizing financing with a 3-year interest-only construction period.

Mezzanine Loans: 8%+

Mezzanine loans are generally added as a source of secondary debt, on top of a borrower’s primary loan. For instance, if a borrower got a bank or life company loan with 70% LTV, they may seek out an additional 15% leverage in the form of mezzanine financing. As mezzanine loans are second position loans, the mezzanine lender will be paid back only after the first-position lender has been paid in full. Since the property itself is already being used as collateral for the original first-position loan, mezzanine lenders generally utilize shares in the ownership entity as collateral.

Due to the additional risk for mezzanine lenders, interest rates are quite high, even in today’s market. On the low end, mezzanine debt starts around 8% — 12%, but can sometimes go up to 20% or even higher for especially risky deals.

Apartment Construction Loans: 6.380% — 10.380%

Much like mezzanine loans, construction loans are always significantly more expensive than regular apartment financing, due to the increased risk for lenders. Even in today’s low-interest rate environment, some construction loan rates are higher than 10%. Fortunately for borrowers, the majority of multifamily construction loans are interest-only (I/O), meaning that borrowers won’t need to worry about making large principal payments while their property isn’t producing any income. While only some can qualify for it, no discussion of apartment construction loans would be complete without mentioning the HUD 221(d)(4) program, which we talked about earlier in this article. The HUD 221(d)(4) loan program offers 3 years of I/O financing, followed by a fully amortizing 40-year loan term, making it one of the most desirable forms of financing for apartment developers.

Janover Ventures is a capital markets and real estate advisory firm. With two decades of experience helping investors and developers finance multifamily and commercial properties, we’re excited to help you acquire or refinance your next property. Click here to apply for a free quote.



Alex Kerrigan

Content Marketing Manager at Janover Ventures. SEO nerd. Hiking Enthusiast.