Ask three lenders to quote the same commercial real estate deal and you will get three documents that are formatted differently, indexed differently, and structured differently — by design. One quotes a spread over SOFR with two years of interest-only, another quotes a fixed rate at lower proceeds with yield maintenance, a third quotes a higher rate but full-term IO and a step-down prepay. None of them is directly comparable off the page, and lenders know that a borrower who cannot normalize the quotes tends to anchor on the headline rate. If you would rather have that normalization done for you, submit the deal once to YieldStack and compare the terms lenders propose side by side.
This guide is the normalization framework: what to put on the comparison sheet, how to translate every quote into the same variables, how to price a prepayment grid, what to do with a single sheet, and how to model which set of terms is actually cheapest for the way you plan to own the asset.
How do you compare commercial loan terms across lenders?
To compare commercial loan terms across lenders, normalize every quote to the same set of variables — loan proceeds, index and spread, all-in rate, amortization and interest-only period, term, recourse, prepayment structure, and fees — then model total cost of capital over your expected hold period instead of ranking quotes by headline interest rate.
The reason this works is that a commercial loan quote is really a bundle of eight or nine separate decisions the lender has made about your deal. Two lenders can price the same risk very differently across those decisions: one gives up rate to win on proceeds, another gives up prepayment flexibility to show a lower coupon. Ranking bundles by a single variable — the rate — systematically picks the wrong loan.
What terms should be on your comparison sheet?
A commercial loan comparison sheet should track, for each lender: loan proceeds, index and spread, all-in rate, amortization schedule, interest-only period, term to maturity, recourse provisions, prepayment penalty structure, origination and exit fees, required reserves and escrows, and any ongoing covenants such as a minimum DSCR test.
| Term | What it drives | The trap when comparing |
|---|---|---|
| Term Loan proceeds (LTV / LTC) | What it drives How much equity you must bring | The trap when comparing A cheaper rate at lower proceeds can cost more equity than it saves in interest |
| Term Index + spread | What it drives Whether quotes move together | The trap when comparing A SOFR quote and a Treasury quote can drift apart between term sheet and closing |
| Term Amortization / interest-only | What it drives Cash flow and balance at exit | The trap when comparing IO boosts cash-on-cash but leaves a larger balloon to refinance |
| Term Term to maturity | What it drives When you are forced to refinance or sell | The trap when comparing A short term in a rising-rate environment is a hidden cost |
| Term Recourse (personal guaranty vs non-recourse) | What it drives Your personal downside | The trap when comparing Rarely priced into the rate — a non-recourse quote at a modest spread premium is often the better trade |
| Term Prepayment penalty | What it drives Cost of selling or refinancing early | The trap when comparing Yield maintenance or defeasance can add six figures to an early exit |
| Term Fees (origination, exit, extension) | What it drives True cost of capital | The trap when comparing An "exit fee" on a bridge quote can outweigh a 25 bps rate difference |
| Term Reserves, escrows, covenants | What it drives Trapped cash and default triggers | The trap when comparing A DSCR covenant with a cash-sweep trigger changes the risk of the loan, not just the cost |
| Term Conditions precedent | What it drives Whether the loan funds at all | The trap when comparing A term sheet is typically non-binding; the cheaper sheet is only cheaper if it closes |
Put every quote into this grid before you form an opinion about any of them. Our guide to reading CRE term sheets covers the individual clauses in more depth.
Why is the lowest rate often not the cheapest commercial loan?
The lowest quoted rate is often not the cheapest loan because rate is only one input to total cost of capital: a quote with lower proceeds forces in more equity, a shorter interest-only period reduces cash flow, and a rigid prepayment structure can add a large exit cost if you sell or refinance before maturity.
An illustrative worked example — hypothetical quotes, not current market pricing. Suppose two lenders quote a $10M-value stabilized acquisition, and the sponsor expects to sell in year three:
- Quote A: 6.55% fixed, 65% LTV ($6.5M), 30-year amortization, yield maintenance prepay.
- Quote B: 6.90% fixed, 70% LTV ($7.0M), three years interest-only, then a step-down prepay of 3-2-1.
Quote A wins on rate by 35 bps — roughly $23,000 a year on this loan size. But Quote B advances $500,000 more, which is $500,000 less equity the sponsor has to raise, and its step-down prepay means a year-three sale costs about 1% of the balance, while Quote A's yield maintenance on a year-three exit could run several times that depending on where Treasuries sit at sale. For a three-year hold, Quote B is very plausibly the cheaper loan — a conclusion you can only reach by modeling the hold, not by comparing coupons. Run both structures through an underwriting calculator and a commercial mortgage calculator to see the year-by-year difference on your own numbers.
How do you compare a floating-rate quote against a fixed-rate quote?
To compare a floating-rate quote against a fixed-rate quote, convert both to an all-in cost over your hold: for the floater, add the index level to the spread and amortize any required interest-rate cap; for the fixed quote, confirm which Treasury it prices over, whether the rate is locked, and what an early exit costs.
Indexes move, and each lender sets its own spread on top: on FRED, SOFR was 3.85% on the 2026-09-21 observation date, 30-Day Average SOFR was 3.68293% on the 2026-09-22 observation date, and the 10-Year Treasury was 5.01% on the 2026-09-18 observation date.
Freddie Mac's two Optigo term sheets (dated 4/26, subject to change) show both structures:
| Term | Optigo Fixed-Rate Loan | Optigo Floating-Rate Loan |
|---|---|---|
| Term Loan terms | Optigo Fixed-Rate Loan 5 to 10 years (up to 30 if not purchased for securitization) | Optigo Floating-Rate Loan 5, 7 or 10 years |
| Term Index | Optigo Fixed-Rate Loan Treasury (Index Lock available) | Optigo Floating-Rate Loan 30-day Average SOFR |
| Term Prepayment | Optigo Fixed-Rate Loan Yield maintenance until securitized, then a 2-year lock-out, then defeasance | Optigo Floating-Rate Loan Four lock-out/step-down options |
| Term Rate cap | Optigo Fixed-Rate Loan None (fixed coupon) | Optigo Floating-Rate Loan Capped or uncapped options; borrower may buy its own cap |
| Term Max LTV / min DCR, 7-year amortizing | Optigo Fixed-Rate Loan 80% / 1.25x | Optigo Floating-Rate Loan 80% / 1.25x |
| Term Recourse | Optigo Fixed-Rate Loan Non-recourse except standard carve-outs | Optigo Floating-Rate Loan Non-recourse except standard carve-outs |
Leverage, coverage and recourse match, so the real choice is a capped worst case with a published step-down exit versus a fixed coupon whose exit is priced by formula or, during a lock-out, barred. See the 2026 CRE rate guide and the live rates page for current levels.
How do you price yield maintenance against a step-down prepayment?
Price yield maintenance against a step-down prepayment by modeling the exit year you actually expect: a step-down charges a fixed, published percentage of the balance in the year you prepay, while yield maintenance is a formula that compensates the lender for lost interest and grows as Treasury yields fall below your note rate.
The Optigo floating-rate sheet publishes four options, each with no premium for the final 90 days:
- Option 1: locked out in year 1, then 1% through year 8.
- Option 2: 3%, then 2%, then 1% through year 8.
- Option 3: 5%, 4%, 3% and 2%, then 1% through year 8.
- Option 4 (10-year capped loans only): 7%, stepping down to 1% in years 7 and 8.
The fixed-rate sheet states "Yield maintenance until securitized followed by 2-year lock-out; defeasance thereafter." A lock-out is not a price but a prohibition: while it runs, no premium buys an exit.
Illustratively (hypothetical figures), prepaying a $10,000,000 balance in year three of a 7-year loan costs $100,000 under Option 2's 1%. Simplified yield maintenance at a 6.00% note rate against a 5.00% Treasury yield, four years remaining, is $10,000,000 × 1.00% × 4 = $400,000 before discounting. Ask each lender for the premium in dollars at your likely exit dates.
What conditions precedent decide whether the cheaper sheet ever funds?
The cheaper term sheet only matters if it funds, and that is decided by its conditions precedent — credit approval, the appraisal and third-party reports, the rate lock, entity and guarantor requirements, and documentation — because a term sheet is typically non-binding on the lender until a commitment or loan documents are signed.
Sort each sheet's conditions into what you control (financials, entity documents; both Optigo sheets say the borrower must typically be a single-purpose entity), what is measurable (appraisal, reports, re-sizing if value or DSCR comes in low), and lender discretion (final approval, material-adverse-change language). Then ask which deposits are refundable and whether the spread is firm. A slightly cheaper term sheet with a discretionary approval and a non-refundable deposit can be the more expensive bet.
What if you only have one term sheet?
If you only have one term sheet, usually from your current lender, you cannot tell whether its terms are competitive by reading it; you find out by reducing it to one all-in cost for your expected hold, then having the identical deal package priced by other lenders before that sheet expires.
Construction and fix-and-flip sheets hide cost in points, draw fees, extension terms and how interest accrues, and proceeds are capped by both LTC and a share of after-repair value (ARV). Illustrative walk-through, hypothetical terms: a $400,000 purchase, $100,000 rehab and $700,000 ARV. At 85% of the $500,000 cost, both sheets lend $425,000, under a 70%-of-ARV cap of $490,000.
- Sheet A (incumbent): 11.00% interest-only on the full loan, 2 points, five draws at $250, a 12-month term, and a 6-month extension for 1 point.
- Sheet B (competing): 10.50% interest-only on the full loan, 2.5 points, no draw fees, and an 18-month term.
| Hold | Sheet A all-in | Sheet B all-in | Difference |
|---|---|---|---|
| Hold 9 months | Sheet A all-in $44,812.50 ($35,062.50 interest + $8,500 points + $1,250 draws) | Sheet B all-in $44,093.75 ($33,468.75 interest + $10,625 points) | Difference B cheaper by $718.75 |
| Hold 14 months, extended | Sheet A all-in $68,541.67 (adds the $4,250 extension point) | Sheet B all-in $62,687.50 | Difference B cheaper by $5,854.17 |
On schedule the incumbent's familiarity costs $718.75; if the project runs long, the extension terms outweigh the rate. For construction, interest usually accrues only on drawn funds, so model the draw schedule month by month.
Can comparing term sheets be automated?
Comparing term sheets can be partly automated: the arithmetic — all-in rate, points, fees, interest-only periods, extension costs, and prepayment cost at a given exit — normalizes cleanly in a model, but recourse carve-outs, conditions precedent, and covenant definitions do not, because each has to be read against your specific deal.
Those lines are where cheaper sheets usually lose: two sheets can both promise non-recourse except standard carve-outs and differ on what springs full recourse. So automate the grid, and have a person read carve-outs, conditions and covenants side by side before signing.
How do you actually get comparable quotes from multiple lenders?
There are two ways to get multiple commercial loan quotes: approach lenders one at a time with your own package, or use a marketplace that sends one standardized package to many lenders in parallel. The parallel approach produces quotes that are far easier to compare, because every lender is pricing exactly the same deal information at the same time.
Sequential shopping has a subtle comparison problem on top of the obvious time problem: the package drifts. The rent roll you send lender four in week six is not the package lender one priced in week one, so the quotes differ partly because the inputs differ. When every lender prices an identical package simultaneously, the differences that come back are real differences in lender appetite — which is the signal you are shopping for.
This is the specific problem YieldStack was built around. YieldStack is a commercial mortgage brokerage: a human deal team packages your deal once and pre-screens it for bankability, the platform matches it against 20,000+ loan programs spanning banks, agencies, debt funds, and CMBS, and the terms lenders propose come back in a side-by-side format so the normalization above is already done. Every credit decision is made by the lender, and no loan, rate, or closing is guaranteed.
- Upfront cost: Zero upfront — it costs nothing to submit a deal and review offers.
- Broker fee: 0.50–1.00% of the loan amount, paid only at closing.
- Speed: median offer in under an hour, from an institutional lender.
- Matching: 5–8 matched lenders per deal, drawn from 20,000+ loan programs.
What should the final comparison come down to?
The final comparison across lender quotes should come down to three modeled numbers for your expected hold: total cost of capital (interest plus fees plus prepay cost at exit), total equity required at close, and the refinance or sale balance at exit — plus one judgment call: how much recourse and covenant risk you take to get them.
A quick pre-decision checklist:
- Model each quote over your actual expected hold, not the loan term.
- Price the exit: what does each prepayment structure cost if you sell in year two, three, and five?
- Count the equity: proceeds differences usually matter more than rate differences.
- Read the covenants: a DSCR test with a cash-flow sweep is a term, not boilerplate.
- Map the conditions precedent: which ones the lender controls, and what deposit is at risk if one fails.
- Confirm what is locked: index, spread, proceeds, and fees can all still move between term sheet and close — ask which are firm.
- Get enough quotes for the comparison to mean something: two quotes tell you almost nothing about where the market clears on your deal.
What is the bottom line on comparing commercial loan terms?
Comparing commercial loan terms across lenders is a normalization exercise: put every quote on the same grid of proceeds, rate basis, amortization, term, recourse, prepayment, and fees, then model total cost over your hold period. The headline rate is one variable of nine, and it is frequently the wrong one to optimize.
The mechanics of getting to closing are covered in our step-by-step guide to getting a commercial real estate loan — and if you would rather have the parallel-quote process run for you, a single YieldStack submission does exactly that.