There’s a quiet windfall sitting inside a lot of commercial portfolios right now. According to the Mortgage Bankers Association, roughly $875 billion in commercial and multifamily debt is scheduled to mature in 2026 — much of it originated five to seven years ago when property values were rising fast and owners were building equity. If you’re sitting on an older loan and your property has appreciated, a cash-out refinance on your commercial property may be the most cost-effective way to put that equity to work without selling.
This guide walks through exactly how commercial cash-out refinances work, what lenders underwrite, and the key differences between multifamily and mixed-use deals.
What You’ll Learn
- How a commercial cash-out refinance is structured and what happens at closing
- What lenders look at: NOI, DSCR, LTV limits, and seasoning requirements
- How multifamily and mixed-use deals are underwritten differently
- When a cash-out refi makes sense — and when it doesn’t
What Is a Commercial Cash-Out Refinance?
A cash-out refinance replaces your existing mortgage with a new, larger loan. The new loan pays off what you owe, and the difference comes to you in cash at closing.
Say you own a 10-unit apartment building worth $2M with a $900,000 mortgage balance. A lender offers to refinance up to 70% LTV — that’s a $1.4M loan. After paying off the existing mortgage, you walk away with roughly $500,000 in cash (minus closing costs). The property is still yours. No sale, no capital gains event.
Commercial cash-out refinances are available across a range of income-producing property types: multifamily (5+ units), mixed-use, retail, industrial, self-storage, and hospitality. The underwriting and LTV limits vary significantly by property type, which is where the details matter.
How Lenders Underwrite a Commercial Cash-Out Refinance
Commercial lenders aren’t looking at your W-2 — they’re looking at the property. The three numbers that drive the underwrite are net operating income (NOI), debt service coverage ratio (DSCR), and loan-to-value (LTV).
Loan-to-Value (LTV)
Most commercial cash-out refinances cap at 65–75% LTV, depending on the property type and loan program. Multifamily properties command the best terms — Fannie Mae and Freddie Mac allow up to 75% LTV on qualifying 5+ unit cash-out transactions. Non-agency lenders may go slightly higher in some markets, but 75% is typically the ceiling.
Mixed-use and retail tend to sit at 65–70% LTV. More specialized assets — hospitality, self-storage, industrial — vary by lender and market conditions.
The LTV ceiling on a cash-out refi is typically 5–10 points tighter than what you’d get on a purchase or rate-and-term refi. That’s the cash-out premium. Lenders want more equity cushion when they’re putting money directly in a borrower’s pocket.
Debt Service Coverage Ratio (DSCR)
Most commercial lenders require a minimum DSCR of 1.20 to 1.25 for cash-out transactions — meaning the property’s net operating income needs to cover the new debt payment by at least 20–25%. Some agency programs allow 1.20 at higher LTVs; non-agency lenders often require 1.25 or better at 70%+ LTV.
DSCR programs for smaller multifamily (2–4 units) can qualify at 1.0 DSCR. But on 5+ unit commercial deals, the bar is higher. If the property doesn’t cash-flow enough to cover the new payment with reasonable cushion, the lender won’t close.
Seasoning Requirements
Most conventional commercial lenders want to see 12 months of ownership before they’ll approve a cash-out refinance. Non-agency and DSCR lenders on smaller properties typically accept 6 months, with some programs going to 3 months. A handful offer no-seasoning options for recently purchased properties where the borrower can document an all-cash purchase.
The seasoning clock starts from the deed recording date — not your closing date or the payoff date of a prior loan. If you’re close to the 12-month mark, it’s usually worth waiting rather than taking worse terms from a shorter-seasoning program.
Multifamily Cash-Out Refinance (5+ Units): How It Works
Multifamily is the most straightforward commercial cash-out scenario because the loan programs are well-developed on both the agency and non-agency sides.
Agency options (Fannie Mae / Freddie Mac): For stabilized properties with strong occupancy (typically 90%+), agency cash-out loans on 5+ unit properties can reach 75% LTV at competitive rates. Terms run 5–30 years. The underwriting is thorough — full appraisal, rent rolls, trailing 12-month operating statements, environmental — but the execution is reliable and the pricing is hard to beat for clean files.
Non-agency options: Debt funds, credit unions, and community banks are active in this space for borrowers who don’t fit agency boxes — recent acquisition, value-add still in progress, or an unusual property configuration. LTV typically runs 65–70%, rates run higher (in the 7–9% range in mid-2026), and terms are often shorter (3–5 year fixed with 25–30 year amortization).
From a recent deal: I recently worked with an investor who’d owned a 12-unit apartment building in the Raleigh market for about four years. He’d bought it for $1.1M right after a value-add renovation was complete, and by the time we started the conversation the property had appraised closer to $1.6M. We structured a cash-out refinance at 70% LTV through a non-agency lender — he walked away with roughly $300,000 net of closing costs and his existing mortgage payoff. He used that capital as a down payment on another small multifamily property nearby. It made a lot more sense than selling and triggering a capital gains event on a property with strong, stable tenants in place.
We work with multifamily borrowers across both agency and non-agency channels and can usually identify the right program early in the conversation. If you’re unsure whether your property would qualify for agency terms, start there — the rate difference between agency and non-agency on a stabilized asset is meaningful.
For more on how multifamily loans are structured at acquisition and what lenders size deals at, see our guide to multifamily loans for 5+ unit properties.
Sitting on equity in a multifamily or mixed-use property? We structure cash-out refinances nationally. Schedule a 15-minute call →
Mixed-Use Property Cash-Out Refinance: What’s Different
Mixed-use properties — typically ground-floor retail or office with residential apartments above — add complexity to the underwrite. How a lender treats the deal depends heavily on the commercial-to-residential income split.
If commercial income is less than 25–30% of total NOI, some lenders treat the deal like a multifamily transaction. Once commercial income crosses 30–40% of total NOI, you’re in commercial underwriting territory, and the LTV ceiling drops — typically to 65–70%.
The key question lenders ask on mixed-use cash-out deals: how stable is the commercial tenant? A 10-year NNN lease with a creditworthy tenant is underwritten very differently than a month-to-month ground-floor retail space. A strong credit tenant can actually improve your proceeds by supporting a higher appraised value. Vacant or month-to-month commercial space typically hurts you — lenders haircut the income or won’t count it at all.
If your mixed-use building has been recently repositioned — say, you added a long-term commercial tenant or improved the residential units — appraisal timing matters. Get the refi done after the improved performance shows up in trailing 12 months of operating statements.
We’ve placed mixed-use cash-out refinances in markets ranging from dense urban corridors to smaller Sunbelt cities. The underwriting is deal-specific. For background on short-term financing strategies that often precede a mixed-use refi, see our guide to bridge loans for real estate investors.
What Can You Use the Proceeds For?
Cash-out proceeds from a commercial refinance are generally unrestricted — unlike some SBA programs, there’s no use-of-proceeds approval required on most conventional and non-agency transactions. Common uses:
- Acquiring another property — the most common use case I see. Investors use equity from one stabilized asset to fund down payments on the next deal rather than waiting to accumulate cash.
- Renovation or repositioning — fund a capital improvement program on the same property or another one without taking on a separate construction loan.
- Partner buyout — a clean way to restructure ownership without forcing a sale.
- Debt consolidation — pay down higher-cost debt, a bridge loan, or mezzanine financing coming due.
- Reserves replenishment — rebuild operating reserves after a heavy capital expenditure period.
One thing worth factoring in: the interest on your new, larger loan is tax-deductible against rental income in most cases. At a 7% rate, the after-tax cost of capital is often closer to 4.5–5% for investors in higher brackets. Build that into your return analysis before deciding whether a cash-out refi makes financial sense versus other capital sources.
When a Commercial Cash-Out Refi Makes Sense (and When It Doesn’t)
It makes sense when:
- Your property has appreciated significantly since purchase or your last refi
- Your existing loan is maturing anyway — adding cash-out at renewal costs minimal incremental rate
- You have a clear, productive use for the proceeds (new acquisition, reposition, payoff of more expensive debt)
- Current rates are reasonably close to your existing rate — you’re not sacrificing much on rate to gain liquidity
- The alternative is a taxable sale event
It doesn’t make sense when:
- You’d be increasing your loan balance substantially at a rate significantly higher than your current mortgage — the debt service jump may not justify the liquidity
- The property’s DSCR won’t comfortably support the new payment — you’d be betting on rent growth to cover the gap
- You’re planning to sell within 2–3 years — prepayment penalties on commercial loans (defeasance, yield maintenance, step-down) can be substantial
- The property is mid-value-add and occupancy is below stabilization — wait until your operating statements reflect the improved performance
Per the MBA’s 2026 CREF forecast, commercial mortgage origination volume is projected to reach $805 billion this year — a 27% jump over 2025 — driven partly by the maturity wall and partly by borrowers who’ve spent the past two years waiting for rates to settle. The activity we’re seeing in our pipeline confirms it: investors are willing to transact at current rate levels because the alternative — staying liquid and undeployed — has its own cost.
If you’re specifically looking at a DSCR-based cash-out on a smaller multifamily holding, see our guide to multifamily DSCR loans — the income verification approach is different and the programs are worth understanding before you shop.
Frequently Asked Questions
What is the maximum LTV for a commercial cash-out refinance?
It depends on the property type and loan program. Multifamily 5+ units can reach 75% LTV through agency lenders (Fannie Mae, Freddie Mac). Mixed-use and other commercial types typically cap at 65–70%. Non-agency programs vary, but generally stay within the same range for cash-out transactions.
Can I cash-out refinance a mixed-use property?
Yes. LTV and DSCR requirements are similar to other commercial property types, though the underwriting gets more nuanced based on the commercial-to-residential income split and the stability of the commercial tenant. Properties with long-term, creditworthy commercial tenants in place tend to get better terms.
How long does a commercial cash-out refinance take to close?
Typically 30–60 days from application to closing. The timeline depends on the appraisal (3–4 weeks is standard for commercial), third-party reports (environmental, property condition assessment), and the lender’s underwriting queue. Clean, organized files close faster. DSCR programs on smaller properties can close in 3–4 weeks when the file is complete at submission.
How much equity do I need to qualify for a commercial cash-out refinance?
Most commercial lenders require at least 25–35% equity in the property after the refinance. At a 70% LTV, you’re keeping 30% in the deal. At 75% LTV, you’re keeping 25%. The exact threshold depends on the lender, property type, and how the DSCR shakes out at the new loan amount.
Ready to access equity in your commercial or multifamily property?
We structure commercial cash-out refinances nationally across multifamily, mixed-use, and other income-producing property types. Whether you’re looking at an agency execution or a non-agency program, we can identify the right fit and give you real terms to evaluate — not just a rate range.
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This article is for informational purposes only and does not constitute financial, legal, or tax advice. Loan terms, rates, and availability vary by borrower, property, and market conditions. Consult Willowbrook Capital for scenario-specific guidance.
