What's the difference between CMBS and life-company debt?

CMBS (Commercial Mortgage-Backed Securities) loans are originated by banks and securitized into bond pools sold to investors. Standard terms: 65–75% LTV, 6.5–8% rate, 10-yr balloon with 25–30 yr amortization, non-recourse, expensive prepayment (defeasance). Life-company debt is held on the insurance company's balance sheet rather than securitized. Standard terms: 60–70% LTV, 6–7.5% rate (often cheapest on stronger sponsors), 5/7/10/15-yr terms, partial recourse common, more flexible prepayment. Life-companies prefer stronger sponsors and lower-leverage deals.

What is agency debt for multifamily?

Agency debt = Fannie Mae and Freddie Mac multifamily mortgages, plus FHA/HUD programs. Fannie Mae DUS (Delegated Underwriting and Servicing) is the standard multifamily product for $1M+ loans, 65–80% LTV, ~6–7% rate, 5/7/10/12/15-yr terms, partial recourse. Freddie Mac Optigo is the Fannie equivalent with similar terms. FHA 223(f) for multifamily refinance/acquisition : 85% LTV, 35-yr fully amortizing, 6–7%, fully assumable, but 6–9 month close.

Which is cheapest for a $5M apartment building?

Depends on sponsor. For stabilized $5M multifamily : Freddie SBL (Small Balance Loan) often best at $1M–$7.5M — 80% LTV, ~6–7% rate, non-recourse, no environmental requirement on smaller deals. Fannie DUS close second. Life-company may match if sponsor is strong and willing to accept partial recourse. CMBS usually beat on rate by 50–100 bps for multifamily because agencies have funding cost advantage.

Which is best for retail / office / industrial?

CMBS is the default for non-multifamily commercial. Office, retail, industrial, hospitality at 65–75% LTV $5M–$50M typically go CMBS for non-recourse + max leverage. Life-company wins on lower-leverage (under 65% LTV) deals with strong sponsors who want partial or no recourse and flexible prepayment. Conventional bank wins on $1M–$5M deals or sponsors with existing bank relationships.

What's the prepayment penalty difference?

CMBS: Defeasance (replacing the property collateral with Treasuries) or yield maintenance. Expensive — $50K–$500K+ to exit early. Life-company: Yield maintenance typical, simpler than CMBS defeasance. Fannie/Freddie: Yield maintenance during locked period, then step-down (e.g., 5-4-3-2-1%) in later years. FHA: Step-down prepay over first 5–10 years. Bank conventional: Often simple 3-5% declining or no penalty after year 3.

CMBS vs Life-Company vs Agency Debt: Commercial Mortgage Compared (2026)

Quick answer

Three main institutional commercial mortgage programs in 2026. CMBS (Commercial Mortgage-Backed Securities): 65–75% LTV, 6.5–8% rate, 10-yr balloon with 25–30 yr amortization, non-recourse, expensive defeasance prepayment. Best for max-leverage retail/office/industrial $5M–$50M. Life-insurance company debt: 60–70% LTV, 6–7.5% rate (often cheapest), 5/7/10/15-yr flexible terms, partial recourse common, simpler yield-maintenance prepayment. Best for lower-leverage stronger-sponsor deals. Agency multifamily: Fannie DUS, Freddie Optigo SBL, FHA 223(f). 65–85% LTV, 6–7%, varied terms. Best for $1M+ multifamily acquisition/refinance — usually beats CMBS on rate by 50–100 bps.

Get matched →

Commercial mortgage programs are deeply segmented — the right product for a $5M Class-A multifamily acquisition is fundamentally different from a $20M Marriott CMBS refinance or a $15M industrial life-company permanent debt. This guide breaks down when each program wins and the trade-offs between them. For property-specific deep-dives see multifamily loan down payment, hotel financing, and self-storage financing.

Side-by-Side Comparison

Dimension	CMBS	Life-Company	Agency Multifamily
Loan size	$3M–$200M+	$10M–$300M+	$1M–$200M+
Rate (2026)	6.5–8%	6–7.5%	6–7%
LTV max	75%	70% (typical)	80%, FHA 85%
Term	10-yr balloon	5, 7, 10, 15-yr	5, 7, 10, 12, 15-yr; FHA 35-yr
Amortization	25–30 yr	25–30 yr	25–30 yr; FHA fully amort
Recourse	Non-recourse	Partial / non-recourse	Non-recourse w/ standard carve-outs
Prepayment	Defeasance / YM	Yield maintenance	YM then step-down
Close time	60–90 days	60–120 days	45–75 days; FHA 6–9 mo
Best property types	Retail, office, industrial, hotel	All except hotel; stronger sponsors	Multifamily only (Fannie/Freddie/FHA)

When CMBS Wins

Non-multifamily commercial at max leverage (70–75% LTV) on stabilized properties
Hold-to-maturity strategy — you intend to sell or refinance at the 10-yr balloon, so expensive prepayment doesn't hurt
Need non-recourse debt without the constraints of life-company underwriting
Top originators: JPMorgan, Wells Fargo, Deutsche Bank, Citi, Morgan Stanley, Goldman Sachs, Bank of America

When Life-Company Wins

Lower-leverage deals (60–65% LTV) — life-companies price these below CMBS
Strong-sponsor borrowers with track record + balance sheet
Need flexible term — 5, 7, 15-yr options vs CMBS' rigid 10-yr
May refinance early — yield maintenance simpler than CMBS defeasance
Top life-companies: Prudential, MetLife, New York Life, Northwestern Mutual, TIAA, Principal, Pacific Life, Mass Mutual, Voya

When Agency (Fannie/Freddie/FHA) Wins for Multifamily

Multifamily acquisition or refinance — agencies have funding cost advantage of 50–100 bps over CMBS for multifamily
Fannie DUS: $1M+, 65–80% LTV, 5/7/10/12/15-yr, ~6–7%, partial recourse on standard structure
Freddie Optigo Conventional: $1M+, similar terms to Fannie DUS
Freddie SBL (Small Balance Loan): $1M–$7.5M, 80% LTV, ~6–7%, non-recourse, no environmental on under $5M — often best on smaller multifamily
FHA 223(f): 85% LTV, 35-yr fully amortizing, ~6–7%, fully assumable. 6–9 month close.
Top agency originators: Walker & Dunlop, Berkadia, CBRE Capital, JLL, Greystone, Newmark, Hunt Capital Partners

Decision Shortcut

Multifamily $1M–$7.5M: Freddie SBL first.
Multifamily $5M+: Fannie DUS or Freddie Optigo Conventional.
Multifamily refi with long-term hold: FHA 223(f) for 35-yr fully amort.
Office/retail/industrial at max leverage: CMBS.
Office/retail/industrial moderate leverage, strong sponsor: Life-company.
Hotel: CMBS at $5M+, SBA 504 under $5.5M. See hotel financing.

Next Step

Get matched with CRE lenders across CMBS, life-company, and agency multifamily. See also multifamily loan down payment, hotel financing, and self-storage financing.