Blended rate calculator
A blended rate is the balance-weighted average of every loan in the stack. In the illustration below, $7,000,000 of senior debt at 6.00% plus $1,000,000 of mezzanine at 11.00% blends to 6.625% on $8,000,000. The calculator adds the combined debt service, coverage and leverage a lender will check on the whole stack.
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Blended rate on the debt
6.625%
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What the blend hides
The blended rate is the cost of the money, weighted by size. It is not the payment. A senior loan that amortizes and a mezzanine loan that does not have very different cash costs per dollar. In the illustration, the blend is 6.625%, but with the senior loan on a 30-year amortization the stack's annual debt service is $613,622, a 7.67% constant on $8,000,000. On $700,000 of NOI that is 1.14x coverage on the whole stack, against 1.39x on the senior loan alone.
Second-lien options with published limits
| Option | Leverage | Coverage | Timing |
|---|---|---|---|
| Fannie Mae supplemental | as high as 70% LTV, depending on asset class and use of proceeds1 | as low as 1.30x1 | available 12 months after the senior loan closes1 |
| Freddie Mac supplemental | 80% combined LTV at 1.25x (7-year term)2 | at least 12 months after the first loan; not in its last 3 years2 | |
| Mezzanine loan | Secured by the ownership interests; needs the senior lender's consent and an intercreditor agreement. | ||
| Preferred equity | An equity position with a priority return; usually not counted as debt by the senior lender. | ||
Subordinate debt also shows up in CMBS pools: in one recent conduit deal, loans with mezzanine debt made up 4.3%3 of the pool.
What lenders check on a stacked deal
- Combined LTV and combined DSCR. Freddie Mac's supplemental limit is written that way. Most senior lenders cap the total, not just their piece.
- Who controls a default. The intercreditor terms (cure rights, purchase options, consent to transfers) matter as much as the rate.
- Maturity alignment. A mezzanine loan that matures before the senior loan creates its own refinance event.
Edge cases
- Fees. Origination fees on a small mezzanine tranche raise its effective cost far more than the same fee on the senior loan. Spread fees over the expected hold to compare.
- Accruing interest. Some mezzanine and preferred equity terms let part of the return accrue rather than pay currently; that lowers today's cash cost and raises the payoff.
Method and formula
blended debt rate = (senior x senior rate + mezz x mezz rate) / (senior + mezz) blended cost incl. preferred = add preferred amount x preferred return to the numerator and its amount to the denominator stack debt service = senior payment x 12 + mezz payment x 12 (preferred return excluded) combined LTV = (senior + mezz) / value; stack DSCR = NOI / stack debt service
Questions people ask
Is preferred equity part of the blended rate?
It depends who is asking. Preferred equity is equity, so the senior lender does not count it as debt service; but it has a priority return that comes ahead of you. The calculator shows a blended cost with and without it, and keeps it out of the debt coverage ratio.
Does the senior lender have to allow mezzanine debt?
Yes. Mezzanine loans are secured by the ownership interests, not the property, and need an intercreditor agreement with the senior lender. Many agency and bank loans prohibit them; CMBS loans sometimes permit them. Agency loans instead offer supplemental loans as a second mortgage.
When is a blended stack cheaper than one bigger loan?
When the alternative is a single high-leverage loan priced as one risk, such as a bridge or debt fund loan. Compare the blended rate here with that single quote; the stack often wins on rate but adds a second lender, a second set of fees and more complex consent rights.
Related tools and guides
Sources
- Fannie Mae Multifamily, Supplemental Mortgage Loans Term Sheet, retrieved November 1, 2026
- Freddie Mac Multifamily, Optigo Supplemental Loan Term Sheet, as of November 2025
- MSBAM 2026-C36 term sheet (FWP, SEC EDGAR, filed Aug 6, 2026), as of August 6, 2026
- CRED iQ, CRE Loan Spreads Tighten Across Property Types (Apr 17, 2026), as of March 31, 2026
- Northmarq, Rates & Spreads (Multifamily Conventional), as of October 22, 2026
- KKR Real Estate Finance Trust 10-Q, Q3 2026, as of September 30, 2026
- Granite Point Mortgage Trust 10-Q, Q2 2026, as of June 30, 2026
- Blackstone Mortgage Trust 10-Q, Q3 2026, as of September 30, 2026
- U.S. Department of the Treasury, daily par yield curve rates, as of October 30, 2026
- Federal Reserve Bank of New York, as of October 30, 2026
How we check figures: methodology and editorial policy.
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