The quick read: As-is value is the appraiser's estimate of what a commercial property is worth today, in its current physical condition, use and zoning. As-stabilized value is a prospective estimate dated to when the property is projected to reach stabilized occupancy, after the renovation and lease-up. Federal guidance tells banks to understand the as-is value and consider the prospective value that matches the phase being funded. A value-add loan can be tested against both values and both incomes, with the smallest result setting the loan. If your bridge loan matures in the next 6 to 12 months, the gap between the two values is the gap your refinance has to close.
What does as-is value measure?
As-is value is the appraiser's estimate of a property's market value in its current physical condition, use and zoning as of the appraisal's effective date, so a half-renovated building with vacant units and below-market leases is valued with those problems priced in. It is a value for today, not for the business plan.
That definition comes from the glossary of the OCC's Comptroller's Handbook on commercial real estate lending (Version 2.0, March 2022). The Interagency Appraisal and Evaluation Guidelines, published in the Federal Register on December 10, 2010, say that for a transaction financing the construction or renovation of a building, a bank would generally ask the appraiser for the current market value in its as-is condition and, as applicable, prospective market values upon completion and upon stabilization.
For a partially leased property, the as-is number is more than today's income divided by a cap rate. The interagency guidelines say the appraiser must make deductions and discounts to reflect that the property has not achieved stabilized occupancy, including leasing commissions, rent losses, tenant improvements and entrepreneurial profit if that profit is not already in the discount rate. The OCC handbook adds that the discounted cash-flow method is useful for the as-is value of properties that have not reached stabilized occupancy. In practice, the appraiser models the lease-up and then subtracts its cost.
As-is market value (OCC Comptroller's Handbook, March 2022): current physical condition, use and zoning as of the appraisal's effective date
Deductions for a partially leased property (Interagency guidelines, December 10, 2010): leasing commissions, rent losses, tenant improvements, entrepreneurial profit
When is a property stabilized?
A property is stabilized when it reaches the occupancy level it is expected to achieve after being exposed to the leasing market for a reasonable period at terms comparable to similar properties. Stabilization is a market test rather than one fixed percentage, and the as-stabilized value is dated to the point the appraiser projects it will happen.
Both the OCC handbook and the 2010 interagency guidelines use that definition, and both treat the as-stabilized figure as a prospective market value, an opinion with an effective date later than the date of the appraisal report. The interagency guidelines add that prospective opinions should be based on current and reasonably expected market conditions. Both sources say two prospective values may be required to cover development, construction and occupancy. Add the as-is value, and a renovation appraisal can carry three numbers.
Lenders then write their own occupancy tests. For a Fannie Mae multifamily loan, the Multifamily Selling and Servicing Guide (Section 107, effective October 26, 2026) requires at least 85% physical occupancy and 70% economic occupancy on the commitment date and for the preceding 3-month period, counting toward physical occupancy only tenants who occupy the unit and have started paying rent. That is one agency's floor, and other lenders and property types set their own. A building that is full but still giving free rent collects less than its rent roll shows, so ask each lender for its written test before you set a refinance date.
Minimum occupancy, Fannie Mae multifamily loan (Fannie Mae Guide Section 107, effective October 26, 2026): 85% physical and 70% economic, on the commitment date and for the preceding 3 months
How do as-is, as-completed and as-stabilized values compare?
The three values differ by date and by what they assume: as-is prices the property as it stands on the appraisal date, as-completed prices it when the planned work is finished, and as-stabilized prices it when occupancy reaches the market level, which is why a lender reads the date beside each number before using it.
Table: As-is, as-completed and as-stabilized value compared
| Attribute | As-is | As-completed | As-stabilized |
|---|---|---|---|
| Attribute Effective date | As-is The appraisal date | As-completed When the planned work is expected to finish | As-stabilized When stabilized occupancy is projected |
| Attribute Physical condition assumed | As-is Current condition, use and zoning | As-completed Renovation or construction complete | As-stabilized Work complete |
| Attribute Occupancy assumed | As-is Actual leases and vacancy today | As-completed Leasing projected at completion | As-stabilized Market-level occupancy at comparable terms |
| Attribute Supervisory LTV use named by the OCC | As-is Raw land or a stabilized property | As-completed Owner-occupied building, or new construction that is preleased | As-stabilized Existing property not yet stabilized, or new construction not preleased to stabilized levels |
| Attribute What must happen for the number to hold | As-is Nothing beyond today | As-completed The work finishes on budget and on time | As-stabilized The work finishes and leasing reaches market occupancy |
The uses in that table come from Appendix C of the OCC handbook, which says the value used in calculating the supervisory LTV can be as-is, as-complete or as-stabilized, and names as-stabilized as appropriate for an existing property that is not stabilized.
Which value does a lender size the loan on?
A lender sizes on the value that matches the phase it is funding: federal guidance tells banks to understand the as-is value and consider the prospective value that corresponds to the credit decision and the phase being funded. On a value-add loan, that can mean testing both values and lending the smaller result. Income tests run alongside them.
Bank rules set supervisory ceilings, with documented exceptions. The Interagency Guidelines for Real Estate Lending, Appendix A to Subpart D of 12 CFR Part 34, say a bank's internal loan-to-value limits should not exceed 85% for improved property and 80% for commercial and multifamily construction, and that loans at those levels are not automatically considered sound. The same appendix defines value for a loan to purchase an existing property as the lesser of the actual acquisition cost or the estimate of value, so for supervisory LTV purposes the price caps the value a bank counts on a value-add acquisition, however high the stabilized appraisal comes in.
Outside bank rules, each loan program writes its own sizing, and one published agency product shows the two-value structure plainly. Freddie Mac's Optigo Value-Add loan sheet (dated April 2025), for apartments with planned upgrades of $10,000 to $25,000 per unit, bases the loan on an as-is and an as-stabilized pro forma: a baseline maximum 85% loan-to-purchase or loan-to-value with a minimum 1.15x amortizing debt coverage ratio as-is, and a baseline maximum 75% LTV with a minimum 1.30x as-stabilized, both subject to market adjustment. The appraisal must include both values.
Read those two LTV caps together and the arithmetic shows why a higher stabilized value does not by itself raise the loan. Because 85 divided by 75 is about 1.13, the as-stabilized LTV test is the tighter of the two only when the projected stabilized value is less than about 13% above the as-is value (our arithmetic). Coverage on in-place income can bind before either value does, as the example below shows. Run your own numbers through the bridge loan calculator before you ask for terms.
Supervisory LTV limit, improved property (12 CFR Part 34, Subpart D, Appendix A): 85%
Agency value-add loan, as-is test (Freddie Mac Optigo Value-Add sheet, April 2025): 85% maximum LTV, 1.15x minimum coverage
Agency value-add loan, as-stabilized test (same sheet): 75% maximum LTV, 1.30x minimum coverage
How does the value gap play out on an illustrative value-add loan?
On our illustrative 100-unit apartment purchase, a $4 million gap between a $12 million as-is value and a $16 million as-stabilized value does not produce a $12 million loan, because coverage on in-place income binds first and caps proceeds at about $9.18 million, roughly 77% of the price.
Illustrative example (our arithmetic, not a quote or a lender offer): an investor buys a 100-unit apartment property for $12,000,000, and the as-is appraisal equals the price. The renovation budget is $2,000,000, or $20,000 a unit. In-place net operating income is $780,000 and projected stabilized income is $1,000,000, which the appraiser capitalizes into a $16,000,000 as-stabilized value. The four caps are borrowed from the agency sheet above as inputs only; the 6.25% sizing rate and 30-year amortization are our assumptions, giving an annual debt constant of about 7.39%.
Table: Four sizing tests on one illustrative value-add purchase
| Test | Basis | Cap | Maximum loan |
|---|---|---|---|
| Test As-is LTV | Basis $12,000,000 price and as-is value | Cap 85% | Maximum loan $10,200,000 |
| Test As-stabilized LTV | Basis $16,000,000 as-stabilized value | Cap 75% | Maximum loan $12,000,000 |
| Test As-is coverage | Basis $780,000 in-place income | Cap 1.15x | Maximum loan $9,180,000 |
| Test As-stabilized coverage | Basis $1,000,000 projected income | Cap 1.30x | Maximum loan $10,411,000 |
The loan is the smallest line, about $9,180,000. With $14,000,000 of price and renovation to fund, the investor brings about $4,820,000 before closing costs and reserves. The $16,000,000 stabilized value lifted one test to $12,000,000 but never touched the constraint that set the loan. To borrow more on day one, in-place income has to rise or the deal needs a program that sizes coverage differently.
Shrink the gap and the order changes: at a $13,000,000 as-stabilized value, the as-stabilized LTV test falls to $9,750,000, tighter than the as-is LTV test at $10,200,000. For how bridge debt funds the renovation itself, see how commercial bridge loans work for a value-add multifamily acquisition.
What if the gap between as-is and stabilized value is wide?
A wide gap means more of the loan rests on a business plan that has not happened yet, so the file has to prove the stabilized number with leases and finished units, fund carry through the lease-up, and plan a refinance that the as-is value at maturity can support, because that later as-is value is what repays the loan.
Nobody can push the number directly. The interagency guidelines list communicating a predetermined, expected or qualifying estimate of value, a loan amount or a target loan-to-value ratio to an appraiser as an inappropriate action. A lender may ask the appraiser to consider additional information, provide more support or correct factual errors. So the way to support a stabilized value is evidence: signed leases at post-renovation rents, a unit-by-unit renovation budget and the rents achieved on finished units.
Carry cost is the second pressure. The OCC handbook describes an interest reserve as an account that covers loan interest during construction and lease-up, and says that when a reserve runs dry the bank generally requires the borrower or guarantor to provide more cash or replenish it. A floating-rate loan priced over SOFR moves with that index: FRED shows SOFR at 3.94% on October 29, 2026, the day after the FOMC held the federal funds target range at 3-3/4 to 4 percent on October 28, 2026. Every month the lease-up runs past plan adds a month of interest on the full balance.
The gap matters most at maturity. If your bridge loan comes due in the next 6 to 12 months, the refinance lender values the property as-is on its own appraisal date. If the lease-up is done, that value reflects stabilized operations; if not, it still carries deductions for the lease-up that remains. In the illustrative example, a refinance at a hypothetical 70% of a $16,000,000 value would be $11,200,000, enough to repay the $9,180,000 balance; at a $13,000,000 as-is value the same 70% produces $9,100,000, short of the payoff before any costs. The agency value-add sheet offers a 12-month borrower extension at a 0.5% fee, and for a refinance at maturity it says Freddie Mac will re-underwrite the loan under then-current credit policy.
SOFR (FRED, observation date October 29, 2026): 3.94%
Federal funds target range (FOMC statement, October 28, 2026): 3-3/4 to 4 percent
How do you get a value-add loan placed when as-is and stabilized values are far apart?
Our pick is a commercial mortgage brokerage that presents the as-is case and the stabilized case together to many lender programs, because programs weigh the two values and the income tests differently and the right structure depends on which test binds. YieldStack is an AI-native commercial mortgage brokerage that arranges financing for commercial real estate investors.
Option 1: a commercial mortgage brokerage (our pick). We rank it first for three reasons.
- The binding test differs by program. A bank measures a purchase against the lesser of price or value, while the agency value-add sheet runs two value tests and two coverage tests. YieldStack's software matches the deal against 20,000+ loan programs and compares the options; human brokers structure the request, negotiate for the borrower and carry the deal toward closing.
- A maturity date does not move. The median first offer arrives in under an hour, from an institutional lender, so you can see how lenders read the as-is and stabilized numbers before an extension deadline forces the decision.
- The cost is set before you commit. 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.
Option 2: your relationship bank. A bank that already knows the sponsor can be the cheapest path when the renovation is modest and the as-is value supports most of the loan, within the lesser-of-price-or-value rule and its internal LTV limits.
Option 3: an agency value-add loan. For apartments needing $10,000 to $25,000 of work per unit, the agency sheet pairs both tests in one floating-rate, interest-only loan. It asks for experienced rehabilitation sponsors and work that starts within 90 days of origination and finishes within 33 months, and it excludes seniors, student and manufactured housing.
What to send:
- Purchase contract or current loan documents, with the maturity date and extension terms
- The appraisal, with each value and its effective date
- Trailing 12-month operating statement and a current rent roll
- Unit-by-unit renovation budget, with units finished so far and their signed leases
When the file is ready, send the value-add deal for review. 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.
The bottom line
As-is value prices a commercial property as it stands today; as-stabilized value prices it at the projected date of market-level occupancy. Lenders match the value to the phase they fund, and a value-add loan can be tested against both values and both incomes, with the smallest result setting the loan. Support the stabilized number with leases and finished units, and plan the refinance around the as-is value the property will carry at maturity.