Bank and credit union commercial mortgages

A bank is usually the right first call when the loan is under a few million dollars, the property is local to the bank, and you can live with a personal guarantee. Banks are the biggest holder of commercial and multifamily mortgages in the country: 37.4% of the $4.99 trillion outstanding at the end of 2025, according to the Mortgage Bankers Association figures cited in Nassau CorAmerica’s 2026 paper.

How a bank prices your loan

There is no published bank spread. A bank starts from its own cost of funds, prices over a benchmark (the 5-year Treasury, SOFR or prime are all common), and then moves the spread for things that have nothing to do with the property: how much you keep on deposit there, whether you’ll move your operating accounts, and how much of its CRE lending capacity your loan uses.

That last point is real. Bank regulators watch how concentrated a bank is in commercial real estate, so two banks in the same town can quote the same deal very differently because one has room on its books and the other doesn’t. Get at least three bank quotes before you decide what “the bank rate” is.

For direction rather than levels, the Federal Reserve’s July 2026 Senior Loan Officer Survey found banks “generally reported easier standards and basically unchanged demand” for CRE loans in the second quarter. And CBRE says banks closed 30% of the non-agency loans it originated or brokered in Q2 2026, up from 24% a year earlier.

How much a bank will lend

Every federally supervised bank works under the Interagency Guidelines for Real Estate Lending Policies, which set ceilings the bank’s own policy can’t exceed:

Loan category	Supervisory LTV limit
Raw land	65%
Land development	75%
Construction: commercial, multifamily and other nonresidential	80%
Improved property	85%

Those are ceilings, not targets. In practice the debt service coverage test binds first on most income property. With 10-year Treasuries near 5%, a loan priced around 7% on a 25-year amortization costs about 8.5 cents per dollar borrowed each year; at a 1.25x minimum coverage, every $100,000 of net operating income supports roughly $940,000 of loan, whatever the appraisal says.

Where banks win and where they don’t

Banks are flexible on structure. They’ll do loans other lenders won’t touch: owner-occupied buildings, small mixed-use, a property with one big tenant, a value-add plan that needs a bit of construction money. They close locally and they’ll talk to you when something goes wrong.

The trade-offs are shorter terms (you’ll likely refinance or reprice in five to ten years), recourse, and covenants that keep testing your property’s coverage every year. If you want a long fixed rate with no guarantee, look at a life company or CMBS instead.

SBA 504 for owner-occupied property

If your business will occupy at least part of the building, ask the bank about SBA 504. Under SBA’s SOP 50 10 8.1, effective October 1, 2026, a 504 project is typically 50% from the bank, up to 40% from a Certified Development Company through an SBA-backed debenture, and at least 10% from the borrower, with real estate terms up to 25 years on the SBA piece. The debenture is capped at $5 million per small business ($5.5 million for small manufacturers and eligible energy projects).