Life insurance company commercial mortgage loans

A life company loan is the lowest-risk permanent loan in commercial real estate, and it is priced that way. The insurer is matching long-dated policy liabilities, so it wants a loan it can hold for its whole term with almost no chance of loss. You get a long fixed rate and usually no personal guarantee. You give up leverage, flexibility and an easy exit.

The scale is real. U.S. life insurers held $873 billion³ of mortgages at the end of 2024, of which $708 billion³ was commercial, and 98.7%³ of commercial mortgages were in good standing (ACLI).

Who gets a quote

Insurers screen hard before they price. A deal that fits looks like this:

Screen	What a life company wants	What usually gets declined
Occupancy	Stabilized, well leased, little near-term rollover	Lease-up, a big vacancy, a value-add plan
Location	Primary and strong secondary metros, good submarkets	Tertiary markets, weak submarkets
Quality	Newer or well-maintained buildings, institutional sponsorship	Deferred maintenance, thin sponsor history
Leverage	Modest: most of the book is at low LTV	Asking for the top of the market’s leverage
Hold period	The full loan term	A likely sale or refinance in a few years

The leverage point shows up in the industry data. At year-end 2024, $615 billion (78%)³ of life insurers’ general-account mortgages had an LTV below 71% (ACLI). Life companies closed 21%⁴ of the non-agency loans CBRE originated or arranged in Q2 2026. Apartments are a large part of the book. Life companies hold 12% ($269 billion) of multifamily debt⁵.

How the loan is sized (worked example)

Life companies size on the same three tests as everyone else, then pick conservative inputs. Illustration: a stabilized industrial building worth $15,000,000 with $900,000 of NOI. Suppose the insurer quotes 55% LTV, a 1.50x minimum coverage, 6.75% fixed and a 25-year amortization.

Test	Math	Loan
Loan-to-value	$15,000,000 × 55%	$8,250,000
Coverage	$900,000 ÷ 1.50 = $600,000 a year; at 6.75% over 25 years each $1 costs $0.0829 a year	$7,236,800
Result	lower of the two	about $7.24 million, 48% LTV

Coverage binds. A 30-year amortization or a partial interest-only period would raise the loan, and the insurer will charge for either. Run the coverage and debt yield math on your own numbers with the DSCR calculator and debt yield calculator.

Some insurers also offer a fully amortizing term. On the same $7.24 million at 6.75%, a 15-year full payoff costs about $64,000 a month, and coverage drops to about 1.17x. The structure retires the loan with no balloon, which is why it works mostly at very low leverage.

What the rate does and does not include

The quote is a spread over the Treasury of matching term, locked at commitment. Two things to understand before comparing it with a bank or CMBS quote:

• The rate lock is a deposit. Insurers lock the rate when they issue the commitment and take a deposit to cover their hedge. Walk away and you lose it. Many insurers will also forward-lock months ahead of a closing, which banks rarely do.
• The spread depends on the bucket. Lower leverage and better property price inside the lender’s range; a secondary-market office building prices outside it, if it is quoted at all.

Prepayment, transfer and added debt

This is where life company loans cost money. Insurers typically lock the loan out in its early years, then charge yield maintenance, then open a short window before maturity. The documents also bar a sale, a transfer of control or a second loan without the lender’s consent.

Rough illustration of yield maintenance. Five years into the loan above, the balance is about $6.58 million at 6.75%. If the matching Treasury is 4.25% when you prepay with five years left, a simple yield maintenance calculation is about: balance × (6.75% − 4.25%) × the present value of five years of payments at 4.25%, or roughly $727,000, about 11% of the balance. Actual formulas differ by insurer and discount monthly or annually. The prepayment penalty calculator runs yield maintenance, defeasance and step-down side by side.

If Treasury yields rise after you close, the same formula can fall to its minimum. The penalty is a bet on rates you make at signing. The prepayment penalty guide sets yield maintenance beside defeasance and step-downs.

What the insurer checks

• Rent roll and leases for rollover across the whole term, not just year one.
• Tenant credit on the largest leases, and whether any one tenant can sink coverage.
• Sponsor net worth, liquidity and experience with the property type; the carve-out guarantor’s balance sheet.
• Property condition report with a reserve schedule; seismic review in some regions; a Phase I environmental report.
• Insurance coverage, often stricter than a bank’s.

Common deal killers

• Rollover inside the term that the insurer cannot underwrite away.
• A planned sale or refinance inside the lockout.
• Market or property type outside the insurer’s allocation for the year. Insurers set annual targets, and a strong deal late in the year can still be declined.
• Asking for leverage. A request near the top of the market is a request for a different lender.

How it compares

If you need	Life company fits?	Check instead
Lowest fixed rate on stabilized property, long hold	Yes	Also price CMBS conduit for higher leverage
Stabilized apartments at higher leverage	Partly	Fannie Mae, Freddie Mac Optigo
Flexibility to sell or refinance early	No	Bank commercial mortgage
A building leased to one rated tenant	Sometimes	Credit tenant lease financing
A very large single asset	Sometimes, or a club of insurers	SASB

For how life insurers operate as a lender group, see life insurance company lenders.