The quick read: On a fixed-rate refinance sized by debt service coverage, you can borrow less than a 2021 loan on the same net operating income, roughly a quarter to a third less at the note rates assumed below, because the same allowable payment carries less principal at a higher rate. The U.S. Treasury's daily par yield curve shows the 10-year at 1.68% on October 21, 2021 and 5.13% on October 21, 2026, up 3.45 percentage points (our arithmetic). In our illustration, $1 million of NOI sized at 1.25x on 30-year amortization supports $14.85 million at a 3.50% note rate and $10.55 million at 6.50%, about 29% less (our arithmetic; assumed rates, not quotes). If your payoff is above the new maximum, the difference is cash you bring to closing.
How do Treasury yields flow into your commercial refinance rate?
Treasury yields flow into a fixed-rate commercial refinance because the fixed coupon is built from a Treasury index plus a lender spread, so when the 10-year rises the coupon rises with it unless the spread narrows; Freddie Mac's multifamily fixed-rate term sheet calls that Treasury index the most volatile part of the coupon.
That is why its Index Lock exists: Freddie Mac's sheet (dated 4/26) says it lets borrowers lock the Treasury index before the rest of the rate. The index moved a long way between a five-year loan's closing and its maturity:
10-year Treasury, October 21, 2021 (U.S. Treasury): 1.68%
10-year Treasury, October 5, 2026 (U.S. Treasury): 5.31%
10-year Treasury, October 15, 2026 (U.S. Treasury): 5.10%
10-year Treasury, October 21, 2026 (U.S. Treasury): 5.13%
Change, October 21, 2021 to October 21, 2026 (our arithmetic): 3.45 percentage points
The Fed's October 2026 district reports do not show spreads offsetting the index. In the Federal Reserve's Beige Book of October 14, 2026, the Kansas City Fed's district report said lenders reported that spreads on CRE loans rose substantially, and that market participants indicated access to credit had diminished. The New York Fed's district report described a regional bank resetting its loan stress-test assumptions to reflect higher rates, and a contact citing significant repricing on maturing fixed-rate loans. For the dated yield story behind these moves, see our note on the October 2026 Treasury yield dip.
How do you calculate the commercial refinance proceeds you lose?
You calculate the proceeds you lose by dividing net operating income by the lender's minimum coverage ratio to get the largest annual payment allowed, then dividing that payment by the loan constant at the new note rate, and comparing the result with the same calculation at your original rate and with today's payoff balance.
Freddie Mac's fixed-rate term sheet (4/26) shows the tests an agency lender applies:
Minimum amortizing DCR (Freddie Mac fixed-rate term sheet, 4/26): 1.25x
Maximum LTV, terms of 7 years or longer (Freddie Mac, 4/26): 80%
Maximum amortization (Freddie Mac, 4/26): 30 years
Terms (Freddie Mac, 4/26): 5 to 10 years
Refinance test waived (Freddie Mac, 4/26): at an amortizing DCR of 1.40x or greater and LTV of 60% or less
The illustration below holds net operating income flat at $1 million, so the largest annual payment at 1.25x is $800,000 in every row. The 3.50% row stands in for a 2021 coupon. The 6.95% row adds the 3.45-point rise in the 10-year to it, assuming an unchanged spread. All four note rates are assumptions, not quotes, and all results are our arithmetic.
| Note rate (illustrative) | Loan constant, 30-year amortization | Max annual debt service at 1.25x | Max loan | Change vs 3.50% |
|---|---|---|---|---|
| Note rate (illustrative) 3.50% (2021-style coupon) | Loan constant, 30-year amortization 5.39% | Max annual debt service at 1.25x $800,000 | Max loan $14.85 million | Change vs 3.50% Baseline |
| Note rate (illustrative) 6.00% | Loan constant, 30-year amortization 7.19% | Max annual debt service at 1.25x $800,000 | Max loan $11.12 million | Change vs 3.50% 25.1% less |
| Note rate (illustrative) 6.50% | Loan constant, 30-year amortization 7.58% | Max annual debt service at 1.25x $800,000 | Max loan $10.55 million | Change vs 3.50% 29.0% less |
| Note rate (illustrative) 6.95% (3.50% plus 3.45 points) | Loan constant, 30-year amortization 7.94% | Max annual debt service at 1.25x $800,000 | Max loan $10.07 million | Change vs 3.50% 32.2% less |
The maximum loan is only half the question. The other half is what you owe. Suppose the 2021 loan was $12 million at 3.50% on 30-year amortization, sized below the coverage ceiling at closing:
Original annual debt service (our arithmetic): $646,624, a 1.55x coverage ratio on $1 million of NOI
Balance after five years of payments (our arithmetic): $10.76 million
Refinance at 6.00% (our arithmetic): maximum $11.12 million, about $0.36 million above the payoff
Refinance at 6.50% (our arithmetic): maximum $10.55 million, about $0.22 million short of the payoff
Refinance at 6.95% (our arithmetic): maximum $10.07 million, about $0.69 million short of the payoff
Five years of amortization absorbed part of the hit, which is why this owner is short by hundreds of thousands rather than millions. An interest-only 2021 loan would still owe the full $12 million and face a gap of roughly $1.45 million at 6.50%. Run your own numbers in the loan sizing calculator and check the coverage line in the DSCR calculator. Then test value: the lender applies its loan-to-value cap as well, and the smaller of the two results sets the loan.
Why doesn't the Fed's September 2026 hike set your fixed refinance rate?
The Fed's September 2026 hike does not set your fixed refinance rate because the Federal Open Market Committee sets an overnight target range, while a fixed commercial coupon is priced off longer Treasury yields plus a spread; the hike feeds through to floating-rate loans indexed to SOFR far more directly than to a fixed refinance.
The Committee's statement of September 16, 2026, approved by a 12-0 vote, reads: "The Committee decided to raise the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent." The minutes of the September 15-16 meeting report that most participants assessed that another increase in the target range would likely be appropriate by year end, and that participants approached each meeting with an open mind. The same minutes record that nominal yields increased around 35 basis points across the 2- to 10-year segment of the yield curve over the period between meetings. Treasury data run through October 21, 2026; on October 28, 2026, the Committee kept the target range at 3-3/4 to 4 percent by a 10-2 vote, and the two dissenters preferred a 1/4-point increase.
Floating-rate borrowers feel the overnight rate directly. Trepp's October 16, 2026 analysis of CRE CLO multifamily loans securitized in 2021 and 2022 says SOFR averaged 0.04% in 2021 and 3.66% in September 2026, and that a higher coupon raises the loan payment, so coverage can fall even when cash flow holds steady. The cohort's median net cash flow DSCR fell to 0.64x from 1.60x at securitization; Trepp notes its fields do not separate higher debt service from changes in cash flow. Our article on the September 2026 Fed minutes and floating-rate CRE loans covers that side.
What closes the gap between your payoff and the new loan?
You close the gap between the payoff and the new maximum loan with some mix of cash equity, a structure that lowers the payment the coverage test sees, a second source of capital, or more time on the existing loan, and the cheapest mix depends on how large the gap is relative to your liquidity and your hold plan.
The main options:
- Cash-in refinance. Bring the difference at closing. It is the simplest route when the gap is small, as in the 6.50% example above.
- Longer amortization. Freddie Mac's fixed-rate sheet allows amortization up to 30 years. If your current loan amortizes faster, moving to 30 years lowers the loan constant and raises proceeds.
- Interest-only periods. They lower the payment you make, but Freddie Mac's sheet says the coverage ratio for interest-only periods is calculated on an amortizing payment, so they may not raise the loan amount.
- Lower leverage tier. Ask each lender whether a lower-leverage tier carries a lower coupon. If it does, rerun the sizing at that coupon; a lower rate lowers the loan constant the coverage test uses.
- Supplemental or subordinate capital. A second piece can fill the gap at a higher cost; model it against the cost of equity.
- Extend and wait. An extension buys time for NOI growth or lower rates, at the cost of whatever the current lender charges for it. Compare the extension cost with the cash-in cost rather than waiting on a better tape.
Whatever you choose, check the existing loan's prepayment terms first. The Freddie Mac fixed-rate sheet shows yield maintenance until securitization, a 2-year lock-out and defeasance after that, with no premium in the final 90 days, so the payoff date can change the cost of refinancing early.
How do you get a commercial refinance placed when the proceeds come in short?
You get a short refinance placed by sending one complete package to several lender types at once and asking each for maximum proceeds at its own coverage test, leverage tier and amortization, so you can see which structure leaves the smallest cash-in requirement before you commit to paying down the loan.
The brokerage route comes first because the gap is a structuring problem, not just a rate problem, and it is solved by comparing coverage tests, amortization and leverage tiers side by side. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors. Its software matches the deal against 20,000+ loan programs, and human brokers then structure the request, negotiate for the borrower and carry the deal toward closing. The median first offer arrives in under an hour, from an institutional lender. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
How the routes compare for an owner refinancing a 2021 loan this quarter:
- Brokerage route (YieldStack), our first pick as the publisher of this guide: one package priced across several lender types, with maximum proceeds, coverage test and cash-in shown side by side. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing.
- Agency multifamily lenders: published coverage and leverage tests, 30-year amortization and index locks, for eligible multifamily.
- Banks and credit unions: relationship pricing and sizing set lender by lender, sometimes with recourse.
- Life companies and conduit lenders: long fixed terms at lower leverage, with their own prepayment structures.
What to send so the proceeds quotes are comparable:
- Trailing 12-month operating statement, current rent roll and the 2021 closing pro forma
- Current loan statement, payoff estimate and the prepayment and maturity terms
- Target loan amount and the largest cash-in your liquidity can absorb
- Capital spent since 2021 and any planned improvements
- Expected closing date and any lock or extension deadline
When the package is ready, send the deal for review and ask every lender for maximum proceeds at its own coverage test, not just a rate.
The bottom line
On a fixed-rate refinance sized by coverage, the loan you can get is NOI divided by the coverage ratio, divided by the loan constant. With the 10-year at 5.13% on October 21, 2026 against 1.68% five years earlier, our illustration shows 25% to 32% less proceeds than a 3.50% loan on the same income. Size your payoff against that number now, and price the cash-in, the structure and the extension before the maturity date chooses for you.