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CMBS vs Agency Multifamily Financing
Compare CMBS and agency multifamily loans for US apartment investors—proceeds, prepay, recourse, and execution on stabilized 5+ unit assets.
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By Multi-Family USA Editorial Team · Reviewed by Scott Dillingham · Published · Updated · 9 min read
CMBS vs agency multifamily: decision context
CMBS and agency multifamily loans both provide permanent debt on stabilized 5+ unit apartment buildings. The better choice depends on proceeds, prepay economics, lender relationship, and asset-specific grid fit—not generic product preference.
Structural comparison
| Factor | CMBS | Agency (Fannie / Freddie) |
|---|---|---|
| Execution channel | Securitized pool | GSE agency programs |
| Typical asset stage | Stabilized | Stabilized |
| Relationship | Often through conduit | Often through correspondent / DUS |
| Prepay | Often YM / defeasance | Often YM / defeasance |
| Fit drivers | Size, market, grid | Occupancy, DSCR, product grid |
Underwriting similarities and differences
Both channels size on normalized NOI with DSCR, debt yield, and LTV constraints. Agency grids may offer more predictable pricing on core assets in primary markets; CMBS may compete aggressively on certain profiles when securitization windows are favorable. Always compare binding constraints side by side.
Prepayment and hold-period planning
Permanent debt prepay cost affects total hold economics. Model exit scenarios under both agency and CMBS term sheets before selecting a path—especially if disposition within five to seven years is plausible.
When to run a dual quote process
Request parallel agency and CMBS indications when the asset is stabilized, diligence-ready, and multiple permanent channels are realistic. Weak packages reduce competitive tension regardless of product.
Next steps
Use the commercial DSCR calculator and read commercial DSCR explained. Review agency vs bridge if the asset is not yet stabilized.
Agency vs bridge, bank vs debt fund, fixed vs floating — map the decision to your asset.