Apartment Refinance: Programs, Sizing and Next Steps

Short answer

Refinancing an apartment building means replacing the current mortgage with a new loan sized on the property's income and appraised value. The lender lends the lowest of three limits: loan-to-value, debt service coverage and, for some lenders, debt yield. Agency, HUD 223(f), bank, CMBS, life company and bridge loans each fit a different property and owner.

What refinancing an apartment building involves

A refinance replaces the mortgage on your building with a new loan. The new lender does not care what you paid or what you owe. It sizes the loan on two things it can verify: the income the property produces and what an appraiser says it is worth. Your current payoff only matters at the end, when you find out whether the new loan covers it.

The work splits into four stages. First you figure out what the property will support. Then you pick the loan type that fits the building and your plans. Then the lender underwrites: rent roll, trailing-12 operating statement, appraisal, property condition report and environmental report, plus a look at you as the sponsor. Last comes the rate lock, loan documents, title and closing, where the new lender pays off the old one.

Most owners refinance for one of three reasons: the loan is maturing, they want cash out, or a bridge loan needs to become permanent debt. Each has its own page below.

The six refinance paths and who each one fits

There are six places to refinance a stabilized apartment building. They differ in leverage, recourse, prepayment flexibility and how much paper they want. The right one depends on the property, the loan size and how long you plan to hold.

Fannie Mae

Fannie Mae buys loans that approved lenders originate under its rules. Its Small Mortgage Loan program covers loans up to $9 million on existing, stabilized properties with 5 or more units, for acquisition or refinance, with terms of 5 to 30 years, up to 30-year amortization, a maximum LTV of 80% and a minimum DSCR of 1.25x. Non-recourse execution is available with standard carve-outs for bad acts such as fraud and bankruptcy. Larger loans go through Fannie's standard DUS products. Fits: a stabilized building you plan to hold for years, where you want fixed-rate, non-recourse debt.

Freddie Mac

Freddie Mac retired its Small Balance Loan program and, as of April 15, 2026, handles small loans on its conventional platform. Its Conventional Small loan is generally $2 million to $10 million, for predominantly market-rate properties of 5 to 50 units, with 5, 7, 10, 12 or 15-year terms and 30-year maximum amortization. Minimum amortizing DCR is 1.25x; maximum LTV is 75% on terms of 5 to under 7 years and 80% on 7 years or longer. Fits: the same owner as Fannie, on a building of 50 units or fewer. Below $2 million, Fannie is the agency option. See Freddie Mac apartment loans.

HUD 223(f)

FHA insures 223(f) loans on existing properties with at least 5 units. Market-rate properties can borrow up to 87% of value at a 1.15x DSCR; affordable properties up to 90% at 1.11x. The term runs up to 35 years (or 75% of remaining economic life, if less), fully amortizing and non-recourse. You pay mortgage insurance: for applications submitted on or after October 1, 2025, 0.25% upfront and 0.25% a year. The property generally must have been completed or substantially rehabilitated at least 3 years before you apply. Fits: an owner who wants the most debt on the same income and the longest fixed term, and can wait for a slower process.

Bank or credit union

Banks set their own leverage, amortization, recourse and prepayment terms. Bank loans are often shorter term and more often carry personal recourse than agency loans, and they can be more flexible on prepayment and on properties that do not fit an agency box. Fits: smaller loans, properties with a story, and owners who want a short hold or the option to sell without a large prepayment cost.

CMBS

CMBS loans are pooled and sold as bonds, which makes them rigid once closed: prepayment usually runs through defeasance or yield maintenance, and changes go through a servicer. CMBS lenders lean on debt yield as a sizing test. Fits: an owner who wants non-recourse debt, sometimes with interest-only periods, on a property that agencies will not take or will not size well, and who expects to hold to maturity.

Life company

Life insurance companies lend their own balance sheet on high-quality, lower-leverage deals. Terms are set lender by lender. Fits: a strong property in a strong market where you want low leverage and long fixed-rate money.

Bridge

Bridge loans are short, usually floating-rate and sized on the business plan rather than in-place income. In a refinance they are the fallback: when the building is not yet stabilized, or a permanent loan will not cover the payoff, a bridge buys time at a higher cost. See refinancing a bridge loan for the way out.

Program comparison

Published limits from each program's own term sheet or HUD guidance. These are maximums; the lender can and often does size below them. Bank, CMBS, life company and bridge terms are set by each lender, so they are not shown as numbers.

Program	Loan size	Max LTV	Min DSCR	Term	Max amortization
Fannie Mae Small Mortgage Loan	Up to $9 million	80%	1.25x	5 to 30 years	30 years
Fannie Mae fixed-rate (conventional)	No published maximum	80%	1.25x	5 to 30 years	30 years
Freddie Mac Conventional Small	Generally $2 million to $10 million	75% to 80%	1.25x	5, 7, 10, 12 or 15 years	30 years
HUD 223(f), market rate	Set by HUD criteria	87%	1.15x	10 to 35 years	35 years
HUD 223(f), affordable	Set by HUD criteria	90%	1.11x	10 to 35 years	35 years
Bank, CMBS, life company, bridge	Varies by lender	Varies	Varies	Varies	Varies

Freddie Mac's 75% applies to terms of 5 to under 7 years; 7-year and longer terms go to 80%. On Freddie Mac, full-term interest-only loans are limited to 65% to 70% LTV. With cash out, HUD 223(f) limits the loan at its Criterion 10 test: 80% of value or the cost to refinance.

How a lender sizes a refinance: three tests, lowest wins

Every permanent lender runs the same arithmetic. It computes the most it would lend under each test and gives you the smallest number.

Loan-to-value (LTV). Appraised value times the maximum LTV. An $8,000,000 appraisal at 80% caps the loan at $6,400,000.
Debt service coverage (DSCR). NOI divided by the minimum DSCR gives the most annual debt service the property can carry. Divide that by the annual loan constant (the yearly payment per dollar of loan at the rate and amortization) and you have the loan. At 1.25x, every $1.25 of NOI supports $1.00 of debt service.
Debt yield. NOI divided by the minimum debt yield. Agencies generally size on DSCR and LTV; CMBS and many bank lenders add a debt yield floor. See the debt yield calculator.

A hypothetical: a building appraised at $8,000,000 with underwritten NOI of $520,000. At 80% LTV the loan could be $6,400,000. An 8% debt yield allows $6,500,000. At 1.25x DSCR, a 6.0% rate and 30-year amortization, the loan constant is about 7.2%, so DSCR allows about $5,782,000. DSCR is lowest, so DSCR binds, and the loan is roughly $5.78 million, not $6.4 million. When rates are above the rate on your old loan, DSCR is usually the test that binds.

Two things change the answer. The NOI is the lender's, not yours. On a Fannie Mae Small Loan, for example, underwriting uses vacancy and credit loss of at least 5% of gross potential rent in most markets, a management fee of at least 3% of effective gross income, and replacement reserves of $200 to $300 per unit, whatever your statement shows (see the T-12 underwriting calculator). And HUD counts its annual mortgage insurance premium as debt service, so its 1.15x is measured against a slightly larger payment.

Run your own building through the worksheet below. It sizes the loan under Fannie Mae Small, Freddie Mac Conventional Small, HUD 223(f) and an editable bank column, and shows which limit binds under each.

Refinance sizing by loan program

Appraised value ($)Net operating income ($/yr)Current loan payoff ($)UnitsInterest rate to test (%)Use a quote or today's index plus a spread. Every program column uses it unless you change the bank column.

Your bank's terms (edit to match a quote)

Bank: max LTV (%)Bank: min DSCR (x)Bank: amortization (years)

Largest loan that fits–

Program limits are the published maximums. Lenders often size tighter, and every loan is sized on the lender's own underwritten NOI and appraisal.

Cash-out vs rate-and-term

A rate-and-term refinance replaces the existing loan and pays the costs of the transaction, with little or no cash coming back to you. A cash-out refinance borrows more than that and you keep the difference. The sizing tests are the same; the question is whether the new loan, after payoff, prepayment cost, closing costs and reserves, leaves anything over.

Some programs treat cash out differently. HUD 223(f) caps a cash-out loan at its Criterion 10 limit (80% of value, or the cost to refinance) instead of the 87% that applies otherwise, and holds back part of the proceeds in some cases. The agency term sheets publish one maximum LTV, but individual lenders may size cash-out loans more conservatively. The full mechanics, and how to estimate net proceeds, are on apartment cash-out refinance.

The maturity problem for loans written in 2019 to 2022

The Federal Reserve held its target range at 0 to 0.25% from March 2020, then raised it eleven times between March 2022 and July 2023, to 5.25 to 5.50%. Loans written before and during that run were sized on much lower payments. When those loans come due, the same NOI supports less debt.

A hypothetical: a $6,000,000 loan written in 2021 at 3.5% on 30-year amortization has about $5.38 million left after five years. If NOI is $450,000, the old loan ran at roughly 1.39x. Refinance at a hypothetical 6.25% with a 1.25x minimum and the most the DSCR test allows is about $4.87 million. The owner is about $509,000 short before closing costs, even if the building's value held. To close with no new cash, NOI would need to reach about $497,000.

That gap is closed one of five ways: pay it down with cash, grow NOI before the refinance, choose a program that sizes higher on the same income (HUD 223(f)), add subordinate capital, or buy time with an extension or bridge loan. The loan maturity playbook walks through each, with dates. If the number does not size at all, read when the refinance won't size.

What to do first

Read your note. Find the maturity date, any extension options and their conditions, and the prepayment terms. The prepayment clause decides whether refinancing early costs nothing or a great deal; see prepayment penalties.
Pull a current rent roll and trailing-12. Then restate the NOI the way a lender will. The rent roll analyzer flags what underwriters ask about.
Size it. Use the worksheet above with a conservative value and the lender's NOI. Compare the result to your payoff plus costs.
Pick the program. If the answer is not obvious, the loan matcher ranks the programs on six questions, and the eligibility checker tests your building against each program's published rules.
Set the date. Work back from your maturity or target closing date with the maturity planner, and start the document checklist.
Get quotes. Collect two or more term sheets and compare them on total cost over your hold, not rate alone, with the term sheet comparison.

Every refinance guide and tool

Guides

Cash-out refinance: how much you can pull and what reduces it.
Loan maturity playbook: options and a month-by-month plan.
Refinancing a bridge loan: what must be true at stabilization.
Refinance requirements: each program's published rules.
Refinance timeline: from first call to funding.
Refinance closing costs: each line item and who charges it.
Prepayment penalties: yield maintenance, defeasance and step-downs.
Bank loan to agency: moving from recourse bank debt to Fannie or Freddie.
When it won't size: options when DSCR falls short.
When to refinance: timing against rates, prepayment and plans.
Loan extensions: what lenders ask for and what it costs.
Refinance rates: how a rate is built from an index and a spread.

Tools

Janover Capital LLC is not a lender. We compare lenders across these programs and arrange the financing. Send your numbers to desk@janover.co or call (561) 556-9997.

In this section

Frequently asked questions

How much can I refinance on my apartment building?

The lender computes a maximum loan under loan-to-value, debt service coverage and, for some lenders, debt yield, and lends the lowest of the three. Fannie Mae Small Loans and Freddie Mac Conventional Small publish an 80% maximum LTV and a 1.25x minimum DSCR (Freddie is 75% on terms under 7 years). HUD 223(f) goes to 87% and 1.15x on market-rate properties. When rates are higher than on your old loan, DSCR usually sets the amount.

Which loan is best for refinancing a small apartment building?

For a stabilized building you plan to hold, agency debt is the usual first look: Fannie Mae Small Loans up to $9 million, and Freddie Mac Conventional Small from about $2 million to $10 million on buildings of 50 units or fewer. HUD 223(f) offers more leverage and a 35-year term but takes longer. A bank fits shorter holds and buildings that do not meet agency rules. Bridge fits buildings that are not yet stabilized.

Can I refinance an apartment building before the loan matures?

Yes, but read the prepayment clause first. Agency and CMBS loans usually carry yield maintenance, defeasance or a declining premium, which can make an early payoff expensive until the open window near maturity. Freddie Mac Conventional Small, for example, has no prepayment premium in the final 90 days. Compare the prepayment cost to the savings with the refinance break-even calculator before you apply.

Why will my loan not refinance even though the building is worth more?

Because value only drives the LTV test. The DSCR test depends on NOI and the new rate, and a loan written at a low rate can carry a balance that today's payment cannot support at the lender's minimum coverage. If DSCR binds below your payoff, you pay down the difference, raise NOI, pick a program with lower coverage requirements such as HUD 223(f), add subordinate capital, or extend.

Does Janover lend the money?

No. Janover Capital LLC is not a lender. It compares lenders across agency, HUD, bank, CMBS, life company and bridge programs and arranges the financing. You can send your rent roll, trailing-12 and loan details to desk@janover.co or call (561) 556-9997, and the desk will size the deal across the programs that fit it.