Your apartment loan is maturing: Refinance, sell, or hold?
If your apartment loan matures in 2027, start now. Price the refinance first: at today's rates, the new loan is capped by the lower of what your income covers at about a 1.25 DSCR and roughly 75% of today's value, and for a loan written in 2021 or 2022, that cap can land below the balance. If you can cover the gap and still want the building, refinance or extend. If you cannot, selling before maturity lets you pick the timing instead of the lender.
A maturing loan is the one deadline in this business you cannot talk your way around. The note says the balance is due on a date, and on that date you pay it, refinance it, or work something out with the lender from a weak position. A loan written in 2020 to 2022 on a five-year or seven-year term comes due between 2025 and 2029, so 2027 sits right in the middle of that wall. If yours is one of them, here is how I would think it through, with the math done in the open.
If you bought in that window, read what your building is worth now if you bought in 2021 or 2022 first. This post picks up where that one stops: the loan.
How small apartment loans are priced
A loan on a 5 to 50 unit building is a commercial loan, not a home mortgage. Your personal credit matters, but the building's income is what qualifies. Banks, credit unions, agency small-balance programs and private lenders all price a fixed-rate apartment loan the same basic way: they take a Treasury yield that matches the fixed period, often the 5-year or 10-year, and add a spread. The spread moves with the lender's appetite, your leverage, the building's age, condition and market, and your track record. I am not going to print a spread here, because it changes week to week and from lender to lender, and a number in a blog post is how owners end up anchored to a rate nobody will give them.
What I can tell you is where the base sits. The 10-year Treasury was 5.22% on October 8, 2026 (FRED, DGS10), against an average of 1.44% in 2021. The 30-year home mortgage averaged 6.86% in September 2026. And on September 16, 2026, the Federal Reserve raised its target range to 3.75% to 4%. Whatever spread your lender quotes sits on top of a base that is several points higher than when your loan was written. More on that history in what interest rates did to Florida apartment prices.
The two tests every refinance has to pass
DSCR, the debt service coverage ratio. Net operating income divided by the annual loan payment. Lenders typically want 1.20 to 1.25 or more. Your NOI sets a ceiling on the payment, and the rate turns that payment into a loan amount.
LTV, the loan-to-value ratio. The loan divided by the lender's appraised value. I use 75% in the example below; your lender may cap it lower. The appraiser values the building on income, so the value is your NOI divided by a market cap rate. Small Florida buildings trade around 7% to 8.5% caps in the deals I price, which is why I write that range on every valuation. See cap rate vs cash-on-cash return for why the cap rate and your return split apart when debt gets expensive.
The lender gives you the lower of the two. That is the whole game.
A worked example
These numbers are an illustration I built for this post, not a real building or a real quote. Change them to yours.
- The original loan. Bought in 2022 for $2,400,000. Loan of $1,680,000 (70% of price) at 3.75% fixed for 5 years, 30-year amortization, maturing in 2027. Annual payment: $93,364.
- Today's income. NOI of $140,000 after current insurance and the post-sale tax bill. At that NOI, the old loan covers at 1.50 DSCR. Comfortable.
- The balance at maturity. After 5 years of payments, about $1,513,000 is still owed.
- Today's value. $140,000 at a 7.5% cap rate is about $1,867,000. At 75% LTV, the most a lender will lend is about $1,400,000.
- Today's DSCR limit. At 1.25 DSCR, the payment can be at most $112,000 a year. Assuming a new loan at 7.0% with a 30-year amortization (an assumption, not a quote), that supports about $1,403,000.
- The new loan. The lower of the two is about $1,400,000, with an annual payment of about $111,771.
- The gap. $1,513,000 owed minus $1,400,000 available means you bring about $113,000 to closing, plus closing costs. If the lender let you refinance the full balance at 7.0%, the payment would be $120,816 and coverage would drop to 1.16, under the 1.25 the lender wants. That is why it will not.
Here is how sensitive that gap is to the rate you are actually offered:
| New rate (30-yr amortization) | Loan the income supports at 1.25 DSCR | Loan at 75% LTV | Cash to close the gap |
|---|---|---|---|
| 6.5% | $1,477,000 | $1,400,000 | $113,000 |
| 7.0% | $1,403,000 | $1,400,000 | $113,000 |
| 7.5% | $1,335,000 | $1,400,000 | $178,000 |
At 6.5% and 7.0%, the value test is the one that binds, so a better rate alone does not shrink the check. At 7.5%, the income test takes over and the check grows. Notice too that this building is not in trouble. It earns more than its old payment, it has equity on paper, and it still cannot refinance without a check from the owner. That is the cash-in refinance problem, and any loan written at a 2021 or 2022 rate can run into it.
Your three choices, side by side
| Refinance | Sell before maturity | Hold (extend or pay down) | |
|---|---|---|---|
| What it takes | Income that passes DSCR and a value that passes LTV at today's rate | A price a buyer's lender will support, and time to market it | Lender agreement to extend, or cash to pay the balance down |
| In the example | About $113,000 cash in at 7.0% | About $279,000 to you after the payoff and a 4% commission, before other closing costs | Same gap, paid now or later, plus any extension fee |
| Fits when | You want to keep the building and can fund the gap | You are tired, need the equity, or do not want to feed the building | You expect income to rise and the lender will work with you |
| Main risk | Thinner cash flow at the higher payment | Selling below a future price | The new deadline arrives with the same problem |
Extension options
Read your note before you call your lender. Some loan documents include a built-in extension option, usually conditioned on the loan being current, on passing a coverage test, and on paying a fee, sometimes with a rate reset. If yours has one and you pass the test, it buys time. If it does not, a lender may still agree to a short extension or modification, but you are asking, not exercising a right, so they set the terms. An extension makes sense when you have a specific reason the numbers will be better in a year, such as units coming off renovation or a rent roll catching up. It does not make sense as a way to wait for rates. In the example above, a point of rate is worth a lot of cash, and nobody can promise you that point.
Seller financing as an exit
If you sell, you can carry part of the price for the buyer, which widens the pool when bank money is tight. The catch for a maturing loan: your existing lender gets paid off at closing, almost always, because of the due-on-sale clause. So the buyer's down payment and new loan have to cover your payoff, and you can only carry paper out of your equity above it. In the example, that equity is about $279,000 after commission. Some of that could become a seller second behind the buyer's bank loan, if the bank allows it. I walk through the structure and the protections in seller financing your Florida apartment building.
Selling before maturity
If the refinance needs cash you do not want to put in, list early. A building marketed six to nine months before maturity sells as a building. A building marketed six weeks before maturity sells as a deadline, and a recorded mortgage often shows buyers exactly when your loan is due. My listings run 90 days, so the calendar math is simple: if your loan comes due in mid-2027, the conversation about selling belongs in early 2027 at the latest.
Before you decide anything, get a refinance read on your actual numbers. My refinance page asks for the loan and the income, and I take the deal to lenders who fit it. If the refinance works, good. If it does not, you will know early enough to sell on your schedule. And if you want to see how the last two rate shocks played out for Florida owners, read the 2008 crash vs the 2022 rate shock.
Questions owners ask
What happens if I cannot refinance my apartment loan at maturity?
The balance is due, so you need to pay it, extend it, or sell. If your loan documents include an extension option and you meet its conditions, you can use it. Otherwise you are asking the lender for a modification on their terms. The cleaner path is to price the refinance and a sale well before the date, so you choose.
How much can I refinance on my apartment building?
The lender gives you the lower of two numbers: the loan your net operating income supports at about a 1.25 DSCR, and about 75% of the appraised value. In my example, a building netting $140,000 supports about $1,403,000 at an assumed 7.0% rate, while 75% of a $1,867,000 value is about $1,400,000.
What is a cash-in refinance?
It is a refinance where the new loan is smaller than what you owe, so you bring cash to closing to pay the difference. In my example, a $1,513,000 balance against a $1,400,000 new loan means about $113,000 out of pocket, plus closing costs.
Should I sell my apartment building before the loan matures?
If the refinance needs more cash than you want to put in, or you were already thinking about selling, yes, start before maturity. Marketing a building months ahead lets you sell on your timing. Marketing it weeks ahead tells buyers you are up against a deadline, and they price that in.
How are small apartment loans priced?
Most fixed-rate small apartment loans are priced as a spread over a Treasury yield that matches the fixed period. The spread depends on the lender, leverage, the building and the borrower. The 10-year Treasury was 5.22% on October 8, 2026, so ask lenders for a full quote rather than relying on any rule of thumb.
When a loan comes due, I price the sale and the refinance side by side so the choice is yours, not your lender's. If you want to hire an apartment broker who will tell you when to keep the building, call me.