Tap to get financing
Nasdaq: JNVRApartment Loans
Fannie Mae
Fannie MaeMultifamily Small Loan ProgramFannie Mae DUS Loans
Freddie Mac
Freddie MacSmall Balance LoansAffordable Housing Express Loans
FHA/HUD
HUD LEAN Loan ProcessingHUD 232/223(a)(7) Refinancing LoansHUD 232/223(f) LoansHUD 241(a) Supplemental LoansHUD 232 LoansHUD 223(a)(7) Refinancing LoanHUD 223(f) LoansHUD 221(d)(4) LoansHUD Apartment Loans
Non-agency
Life Company Apartment LoansHard Money Apartment LoansApartment Bridge LoansMezzanine FinancingSmall Apartment LoansBank LoansConstruction LoansCMBS Loans
Learn
BlogYield Maintenance CalculatorLoan Repayment CalculatorNOI CalculatorGross Rent Multiplier CalculatorDebt Service Coverage Ratio (DSCR) CalculatorDebt Yield CalculatorCash on Cash Return CalculatorCap Rate CalculatorBreak Even Ratio CalculatorApartment Mortgage CalculatorLoan To Value and Loan To Cost RatiosApartment Finance Due Diligence ResourcesHow to Purchase an Apartment Property
About us
TeamLeadership
(561) 556-9997 Get financing →
Newly Published
Nov 1 at Apartment Loans
What is Conduit Financing?
Sep 9 at Apartment Loans
Operating Expense Ratio Explained
Jul 1 at Apartment Loans
Real Estate Mutual Funds
Explore the Janover Network
Oct 2 at Multifamily Loans
Multifamily Minute Reader Reflections: How Are You Coping With Staff Shortages?
Sep 29 at SBA 504 Loans
SBA 504 Loans for Preschools and Daycare Centers
Sep 26 at HUD Loans
What Is Fair Market Rent? 2024 FMR Calculator by ZIP
Was This Article Helpful?
Last updated on Aug 23, 2022
2 min read

Mezzanine Financing for Apartment Properties

Mezzanine Financing is the middle ground between debt and equity financing.

In this article:
  1. Commercial, Multifamily, and Apartment Mezzanine Financing
  2. 2022 Sample Mezzanine Financing Loan Terms For Apartment Loans
  3. Get Financing
Start Your Application and Unlock the Power of Choice Experience expert guidance, competitive options, and unparalleled industry expertise.
Click Here to Get Quotes →
$5.6M offered by a Bank at 6.1%$1.2M offered by a Bank at 6.0%$2M offered by an Agency at 5.6%$1.4M offered by a Credit Union at 6.1%Click Here to Get Quotes!

Commercial, Multifamily, and Apartment Mezzanine Financing

A lot of the time, merchant builders who are looking to maximize their IRR also need to maximize leverage, as the cost of equity is often more expensive than non-recourse debt. Sometimes, In other situations, merchant builders simply need more leverage to keep liquidity available for other opportunities. When looking to build your capital stack, your first option should be mezzanine financing and preferred equity.

Even though mezzanine debt greatly increases leverage, there are some senior lenders that don’t allow it. For example, HUD apartment loan programs never permit mezzanine loans, while agency lenders like Fannie Mae® and Freddie Mac® typically restrict mezzanine debt to approved sources that are obligated to lend under specified guidelines. CMBS lenders permit mezzanine debt in some cases, but not always. When a senior lender does agree to permit mezzanine debt, both lenders must sign an inter-creditor agreement, which governs the rules between the two parties in regards to how and when each will get paid.

2022 Sample Mezzanine Financing Loan Terms For Apartment Loans

Amount: $3 million and up

Term: Coterminous with first (typically between 5-7 years)

Interest Rates: Typically between 9% - 16% (interest only)

Fees: 3% - 6%

Maximum LTC: 85%

Advantages:

  • Increases leverage and IRR
  • Interest is tax-deductible
  • Flexible options include equity kickers for reduced interest rates and PIK toggles for reduced interest payments
  • Disadvantages:

    • Can be extremely expensive (up to 20% for some borrowers)
    • Not allowed by all lenders
    • High fees and additional legal costs
    In this article:
    1. Commercial, Multifamily, and Apartment Mezzanine Financing
    2. 2022 Sample Mezzanine Financing Loan Terms For Apartment Loans
    3. Get Financing

Getting commercial property financing should be easy.⁠ Now it is.

Click below for a free, no obligation quote and to learn more about your loan options.

Get financing →
Janover logo

Apartment Loans is a Janover company. Please visit some of our family of sites at: Multifamily Loans, Multifamily Today, Commercial Real Estate Loans, SBA7a Loans, CMBS Loans, Apartment Loans, HUD Loans, HUD 221d4 Loan, HUD 232 Loan, HUD 223f Loan, HUD 223a7 Loan, SBA Express Loans, SBA 504 Loans, and OpportunityZones Help.

Janover Inc.

6401 Congress Ave
Ste 250
Boca Raton FL 33487
(561) 556-9997 

hello@apartment.loans

Loan Types

Bank Loans
CMBS
Construction Loans
Fannie Mae
Freddie Mac
HUD/FHA Apartment Loans
Commercial Loan Rates

Site Information

Privacy Policy
Terms of Use

This website is owned by a company that offers business advice, information and other services related to multifamily, commercial real estate, and business financing. We have no affiliation with any government agency and are not a lender. We are a technology company that uses software and experience to bring lenders and borrowers together. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively.

Freddie Mac® and Optigo® are registered trademarks of Freddie Mac. Fannie Mae® is a registered trademark of Fannie Mae. We are not affiliated with the Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA), Freddie Mac or Fannie Mae.

This website utilizes artificial intelligence technologies to auto-generate responses, which have limitations in accuracy and appropriateness. Users should not rely upon AI-generated content for definitive advice and instead should confirm facts or consult professionals regarding any personal, legal, financial or other matters. The website owner is not responsible for damages allegedly arising from use of this website's AI.

Copyright © 2023 Janover Inc. All rights reserved.