CMBS loan requirements

The requirements at a glance

Requirement	What the lender asks for	Recent loans (median)
Loan-to-value	Disclosed guidelines permit up to 80%, with exceptions	63.9%
Debt service coverage	Disclosed guidelines generally require at least 1.20x on underwritten net cash flow	1.47x
Debt yield	No single published floor; each lender sets its own and sizes to it	10.1%
Occupancy	Stabilized income; vacancy underwritten at market	94%
Loan size	No legal minimum; fixed costs make small loans uneconomic	$15M
Borrower	Single-purpose entity that owns only the property	Standard
Guarantor	Signs the non-recourse carve-out guaranty and environmental indemnity	Standard
Third-party reports	Appraisal, Phase I environmental, property condition; seismic and zoning where needed	Standard

Guidelines: Bank of America's and the Morgan Stanley Group's underwriting standards (generally a 1.20x minimum coverage and an 80% maximum loan-to-value, with exceptions) and Wells Fargo Bank's (loan-to-value generally 80% or less), as disclosed in the BANK5 2025-5YR14 prospectus (filed April 2, 2025), pp. 254, 268 and 294. Medians: loans securitized into public CMBS trusts from October 19, 2025 to October 19, 2026, co-op housing aside (958 loans; leverage, coverage and debt yield from the 750 with whole-loan data), from SEC Form ABS-EE filings. Methodology.

What recent CMBS loans look like, by property type

Guidelines are ceilings. The table shows what lenders actually closed. "Low end" is the 10th percentile for coverage and debt yield and the 75th percentile for leverage, which is roughly where the most aggressive quarter of loans landed. Leverage, coverage and debt yield use loans whose filings carry whole-loan figures; a pari passu note alone holds only a piece of a split loan.

Property type	Loans	Median LTV	LTV, 75th pct.	Median DSCR	DSCR, 10th pct.	Median debt yield	Debt yield, 10th pct.	Median occupancy
Multifamily	292	67.3%	70.5%	1.33x	1.21x	8.8%	7.7%	96%
Retail	141	62.7%	67.5%	1.61x	1.32x	11.3%	9.4%	97%
Self-storage	115	60.6%	65.6%	1.57x	1.33x	9.7%	8.6%	87%
Hotel	96	61.1%	65.0%	1.77x	1.53x	15.0%	13.3%	73%
Office	87	59.6%	64.7%	1.84x	1.57x	13.5%	11.6%	90%
Mobile home park	82	63.7%	66.6%	1.39x	1.28x	9.4%	8.3%	92%
Mixed use	66	62.5%	67.0%	1.42x	1.26x	10.0%	7.9%	97%
Industrial	64	63.5%	66.6%	1.49x	1.31x	10.9%	9.4%	100%
All types except co-op	958	63.9%	68.1%	1.47x	1.26x	10.1%	8.1%	94%

Loans securitized from October 19, 2025 to October 19, 2026. DSCR is net cash flow at securitization over the annual payment; debt yield is net operating income over the loan amount. Co-op housing loans are left out of this table because co-op corporations borrow at very low leverage; see co-op CMBS loans. Full tables: CMBS statistics.

The spread between property types is the useful part. In this window the highest median coverage was office (1.84x) and hotel (1.77x); the thinnest was multifamily (1.33x). Lenders ask for more cushion where income can swing (hotel revenue resets nightly; office leases roll in large blocks) and accept less where income comes from many small leases. If your property sits at the high-coverage end, expect the lender to size well under the 80% guideline.

How the three tests size your loan

The lender computes a maximum loan under each test and offers the smallest. Loan-to-value caps the loan against the appraised value; debt service coverage caps it against net cash flow and the payment; debt yield caps it against net operating income with no reference to the rate. Which test binds depends on the price: a property valued at a low cap rate usually hits coverage or debt yield first, while one valued at a high cap rate hits loan-to-value first.

Example (illustrative property): appraised value $20M, net operating income $1.4M, net cash flow $1.33M, interest only at 6.63% (the median note rate on CMBS loans originated in the last 90 days, from our CMBS rate data). Sized to the levered end of recent loans:

Test	Target	Maximum loan
Loan-to-value	68.1%	$13.61M
Debt service coverage	1.26x	$15.92M
Debt yield	8.1%	$17.26M

The offer would be about $13.61M, set by loan-to-value. Run your own numbers in the CMBS loan calculator, and read debt yield and DSCR for how each is computed. Lenders underwrite their own net operating income, usually lower than the owner's (a vacancy factor, a management fee, replacement reserves), so start from a conservative number. How CMBS underwriting works.

What the property has to have

• Stabilized, documented income. Historical operating statements and a current rent roll, reviewed against leases. Recently bought properties with a short history are possible, but the lender leans harder on the appraisal and in-place leases.
• An appraisal by an MAI-designated or state-certified appraiser, stating it follows USPAP and the FIRREA Title XI guidelines.
• A Phase I environmental site assessment to ASTM standards for every property, with a Phase II if the consultant recommends one.
• A property condition assessment by licensed engineers; immediate repairs are escrowed at closing (Bank of America cites 100% to 125% of the estimated cost) or covered by a sponsor guarantee.
• A seismic report in seismic zones 3 and 4, and evidence of zoning compliance (a zoning report, letters or title endorsements).
• Insurance: property cover at replacement cost, general liability (Bank of America cites at least $1,000,000), and business interruption for at least 12 months of rent. CMBS insurance requirements.

Reports generally must be recent: Bank of America uses existing reports only if dated no more than 180 days before closing. All of the above is from the lenders' own disclosures in the BANK5 2025-5YR14 prospectus, pp. 292 to 298.

What the borrower has to have

• A single-purpose entity. A new LLC or partnership that owns only the property, with covenants against other business and other debt. Larger loans add an independent director and a non-consolidation opinion so the borrower stays bankruptcy-remote.
• A carve-out guarantor. A person or entity with real net worth and liquidity who signs the guaranty of recourse obligations and the environmental indemnity. Net worth and liquidity covenants are written into each guaranty; there is no single market number. What the carve-outs cover.
• A clean background. Lenders run credit reports, criminal and background checks, and searches for judgments, liens, bankruptcy and litigation on the sponsor and principals, and review their financial statements and tax returns.
• Experience with the property type. Not a written test, but a factor every credit committee weighs, especially for hotels and transitional office.

When the guidelines bend, and when CMBS is the wrong loan

Each lender's thresholds are guidelines. The prospectus says exceptions are allowed for tenant quality, reserves, letters of credit and guarantees, and it discloses one quieter lever: a lender may cut the rate in exchange for an upfront fee, which raises the coverage ratio enough to meet the minimum. Ask whether a quote's coverage depends on a buy-down.

CMBS is usually the wrong loan when:

• You occupy the building. Owner-occupied property is SBA territory: 7(a) and 504 loans require the business to occupy at least 51% of an existing building (13 CFR 120.131).
• The property is not stabilized (lease-up, heavy renovation, construction). That is bridge or construction debt.
• The loan is small, roughly under $1 million to $2 million, where fixed closing costs swamp the rate. The CMBS minimum.
• You expect to sell or refinance early. Prepayment runs through defeasance or yield maintenance.

Requirements next to other lenders

Lender	Leverage	Recourse	Where it is set
CMBS conduit	Guidelines up to 80% LTV, 1.20x DSCR; recent median 63.9%	Non-recourse with carve-outs	Each originator's guidelines, then rating agency and B-piece review
Bank	Supervisory ceiling of 85% for improved property	Often a personal guarantee	12 CFR 365, Appendix A and each bank's policy
Freddie Mac (Conventional Small, multifamily)	1.25x DCR; 75% to 80% LTV amortizing, 65% to 70% full-term interest only	Non-recourse with carve-outs	Freddie Mac term sheet, April 2026
Life company	Typically lower leverage than CMBS	Usually non-recourse	Each insurer's investment policy

Comparisons in depth: CMBS vs bank loans, CMBS vs agency loans, CMBS vs life company loans. Ready to gather documents? Use the CMBS loan checklist.

Sources: BANK5 2025-5YR14 prospectus (Wells Fargo Commercial Mortgage Securities, Inc., 424B2, filed April 2, 2025), sponsor underwriting sections, pp. 254, 268 and 292 to 298; 12 CFR part 365, Appendix A; 13 CFR 120.131; Freddie Mac Optigo Conventional Small term sheet (4/26). Loan figures: SEC Form ABS-EE asset-level data, as of 2026-10-28.