CMBS underwriting: how a conduit lender sizes your loan
By Brad Beattie, Director, Capital Markets, Janover Capital LLC · Published
A CMBS lender underwrites the property's cash flow, then lends the smallest amount allowed by three tests: loan-to-value, debt service coverage and debt yield. On CMBS whole loans originated between October 19, 2025 and October 19, 2026 (co-op housing aside), the medians were 63.9% LTV, 1.47x DSCR and 10.1% debt yield, from SEC filings.
1. The lender rebuilds your cash flow
Everything starts with underwritten net cash flow, the lender's own version of what the property earns. The BANK5 2025-5YR14 prospectus describes how its loan sellers built it: revenue from the rent roll, signed leases, executed extension options and property financial statements; non-recurring and non-property income removed; operating expenses including utilities, repairs, management fees, insurance, real estate taxes and any ground rent; then reserves for capital expenditures, tenant improvements and leasing commissions deducted to get from net operating income to net cash flow.
In practice the lender's figure comes in under the borrower's: vacancy at the market or actual level, whichever is higher; a management fee charged even on a self-managed property; expenses at trailing levels or above; leases near expiry rolled at market. Seeing that gap early is the single best predictor of where proceeds land. The prospectus warns investors of the same thing in a risk factor titled "Underwritten Net Cash Flow Could Be Based On Incorrect or Flawed Assumptions."
2. Value: an as-is appraisal
Loan-to-value ratios in a CMBS prospectus are generally calculated on "as-is" appraised values (BANK5 2025-5YR14 prospectus, "Mortgage Pool Characteristics"). A stabilized-value or as-complete appraisal may be shown, but conduit loans are made against what the property is worth today. Third-party reports fill out the file: the appraisal, a property condition report, a Phase I environmental site assessment and, where relevant, zoning and seismic reports.
3. Size the loan: the lowest of three tests
| Test | Formula | What moves it | Recent median |
|---|---|---|---|
| Loan-to-value | Loan ÷ appraised value | Appraisal, cap rates | 63.9% |
| DSCR | Net cash flow ÷ annual debt service | Interest rate, amortization, interest-only | 1.47x |
| Debt yield | NOI ÷ loan amount | Only income and loan size | 10.1% |
Each lender sets its own limits by property type, market and the bond market's appetite that week; none is set by regulation. Run the three tests on your property with the CMBS loan calculator. When rates are high, DSCR usually binds; when values are rich, debt yield does.
What recent CMBS loans actually looked like
Medians at securitization from each loan's SEC asset-level filing (Form ABS-EE), loans originated between October 19, 2025 and October 19, 2026. Leverage, coverage and debt yield use whole loans only.
| Property type | Loans | Median size | LTV | DSCR | Debt yield | Full-term IO |
|---|---|---|---|---|---|---|
| Multifamily | 292 | $15.1M | 67.3% | 1.33x | 8.8% | 95% |
| Retail | 141 | $16.7M | 62.7% | 1.61x | 11.3% | 85% |
| Self-storage | 115 | $8.9M | 60.6% | 1.57x | 9.7% | 78% |
| Hotel | 96 | $19.0M | 61.1% | 1.77x | 15.0% | 67% |
| Co-op housing | 89 | $3.5M | 10.3% | 6.93x | 52.6% | 27% |
| Office | 87 | $37.1M | 59.6% | 1.84x | 13.5% | 82% |
| Mobile home park | 82 | $6.2M | 63.7% | 1.39x | 9.4% | 96% |
| Mixed use | 66 | $16.7M | 62.5% | 1.42x | 10.0% | 89% |
| Industrial | 64 | $20.9M | 63.5% | 1.49x | 10.9% | 86% |
| All types except co-op | 958 | $15.0M | 63.9% | 1.47x | 10.1% | 87% |
Three things stand out. Leverage is moderate: the median loan was at 63.9% of appraised value and only one in ten went above 70.9%. Interest-only is the norm: 87% of loans paid no principal for their whole term. And short terms dominate: 79% of loans had five-year terms and 21% had ten. Rates for the same loans are on CMBS loan rates; the full breakdown is on CMBS statistics.
Loan sizes
| Loan amount | Loans | Share |
|---|---|---|
| Under $5M | 75 | 8% |
| $5M to $10M | 215 | 22% |
| $10M to $25M | 365 | 38% |
| $25M to $50M | 162 | 17% |
| $50M and up | 141 | 15% |
The median loan was $15.0M; the middle half ran from $8.4M to $33.0M. Small loans do get securitized, but fixed closing costs weigh more on them; see CMBS loan minimums and closing costs.
4. The sponsor and the structure
CMBS loans are non-recourse, so the lender's review of the people is about character and capacity to carry the property, not about repayment from personal assets. Expect a review of the sponsor's experience with the property type, net worth and liquidity of the carve-out guarantor, background and credit checks on the principals, and the ownership chart. The borrower is a single-purpose entity that owns only the property. Structure is underwritten too: upfront and ongoing reserves for taxes, insurance, replacements and leasing, a lockbox and cash management triggers, and insurance requirements.
5. The bond market reviews your loan too
A conduit loan is underwritten to be sold. The loan seller gives the trust representations and warranties about each loan and must repurchase, substitute or compensate for a loan that materially breaches them, so its underwriting is written to survive that test. Before the bonds price, the B-piece buyer and the rating agencies re-underwrite the pool. In BANK5 2025-5YR14, the prospectus says the B-piece buyer could "request the removal, re-sizing or change in the expected repayment dates or other features" of loans, and the pool "was adjusted based on certain of these requests." That is why a lender may ask for changes after a term sheet: the bonds have to sell. The sequence is laid out in the securitization process, and the agencies' role in how CMBS bonds are rated.
Getting ready
The documents a lender asks for are on the CMBS loan checklist, and the thresholds in plain terms are on CMBS loan requirements. If you are weighing a conduit loan against a bank or life company, see CMBS vs bank loans and CMBS vs life company loans.
Sources: BANK5 2025-5YR14 prospectus (424B2, filed 2025-04-02), "Description of the Mortgage Pool" (definitions of Underwritten Net Cash Flow, Effective Gross Income, Total Operating Expenses), "Mortgage Pool Characteristics", "Risk Factors" and "Potential Conflicts of Interest in the Selection of the Underlying Mortgage Loans"; SEC Form ABS-EE asset-level filings via cmbs.news, as of October 28, 2026. How the medians are computed.
Questions people ask
How do CMBS lenders underwrite a loan?
They underwrite the property first: a lender-adjusted net cash flow, an as-is appraisal, and then the loan is sized to the lowest of a maximum loan-to-value, a minimum DSCR and a minimum debt yield. The sponsor is reviewed too, but the property carries the loan.
What loan-to-value do CMBS loans reach?
On CMBS whole loans originated between October 19, 2025 and October 19, 2026 (co-op housing aside), the median loan-to-value at securitization was 63.9%, and one loan in ten was above 70.9%. Each lender sets its own maximum by property type.
Why is the lender's net cash flow lower than my NOI?
Lenders rebuild the cash flow: vacancy and credit loss at market or actual, whichever is worse; non-recurring income removed; expenses at trailing levels or higher; a management fee even if you self-manage; and reserves for capital items, tenant improvements and leasing commissions. Each adjustment lowers the number the loan is sized on.
Do CMBS lenders check the borrower's credit?
Yes, though the loan is non-recourse. The sponsor and the person signing the non-recourse carve-out guaranty are reviewed for experience, net worth, liquidity and background, because the guarantor is on the hook for bad acts and the bond buyers will ask.
See your loan the way a CMBS lender will
Janover Capital LLC underwrites your property before lenders do, then prices CMBS against bank and life company options.