San Francisco Apartment Loans in 2025

In order to determine San Francisco apartment loan rates, the first thing an apartment loan lender needs to know is the type of property involved. Pricing on apartment loans will usually be lower than pricing for certain other commercial property types, as apartments remain a preferred investment in today's market. After the lender understands the asset class, they will look at the deal metrics, which include Loan to Value ratio (LTV), Debt Service Coverage Ratio (DSCR), and Debt Yield. Loans with a lower LTV and higher DSCR are considered less risky and will have better pricing. Another important deciding factor will be the location of the property. Top quality urban and suburban markets will be preferred over rural locations. One other major deciding factor will be the borrower's experience, credit, net worth, and liquidity. Strong borrowers with experience can expect the best pricing. The bottom line is that apartment lenders need to understand the entire picture before quoting rates. As of October 29, 2025, you can check where apartment loan rates currently start, including options for apartment building financing and refinance.

San Francisco apartment loan rates fluctuate based on current market indices. Most apartment loans and apartment building loan programs are priced over one of the following: the US Treasury rate, the Wall Street Journal Prime Rate, or the Secured Overnight Financing Rate (SOFR). In early 2025, all of these rates are still elevated as a result of the Federal Reserve's actions to curb inflation. As market rates gradually soften, apartment loan rates should trend downward. Many borrowers today are not locking in long term fixed rates, but are opting for shorter term structures and lighter prepayment penalties so that they can refinance when rates are more favorable.

It used to be fairly common to obtain 80% financing when rates were in the 3% and 4% range, as the property's cash flow could support higher levels of debt. In early 2025, with many rates in the 6% and 7% range, cash flow is more restricted due to higher debt service costs. We often see maximum loan to value ratios in the 65% to 70% range today as a result of these higher rates. As market rates ease, we would expect to see higher loan to value ratios and lower down payment requirements for apartment building financing.

Many borrowers who are looking to refinance loans taken out five to ten years ago are experiencing several obstacles. First, since rates in early 2025 are higher, many loans are coming up cash short (the new loan amount is not enough to pay off the maturing loan). These borrowers are often required to inject more cash into their deals or take on equity partners who are willing to invest. Today's higher rates are causing mortgage payments that are sometimes rising faster than rental income can support. Until rates ease, many borrowers will experience difficulty refinancing their existing apartment building loan. Once rates soften, refinancing may become more attractive.

There are many reasons to work with a qualified and experienced San Francisco apartment loan broker. A mortgage broker will have a large database of capital sources, including agency lenders, insurance companies, CMBS lenders, national, regional and local banks, credit unions, debt funds, and private lenders to choose from. The broker will analyze your specific deal and determine which capital source is most likely to offer the best apartment building financing terms at the highest likelihood of approval. The broker will professionally package your deal and negotiate the best structure for you.

Select Commercial has over 40 years of experience negotiating commercial and apartment loans for its clients. They have an extensive nationwide network of capital sources that are able to consider most loan scenarios. Many borrowers go to one or two of their local banks, but don't have the nationwide reach to approach other apartment lenders that are often offering better rates and terms. Select Commercial spends the time understanding every client's needs and will aim to negotiate all important loan terms, including rate, term, amortization, prepayment penalty, recourse obligations, fees, and reporting requirements.

Lenders look at many items when deciding whether to approve an apartment loan or an apartment building loan. Some of the most important factors include LTV ratio, DSCR ratio, location of the property, property condition, occupancy, and borrower qualifications (experience, credit, net worth, and cash liquidity). While most of these factors are common sense and assumed by borrowers, the DSCR ratio might need some explanation. DSCR stands for Debt Service Coverage Ratio and is a ratio of the total net operating income divided by the annual debt service. Most lenders will require a DSCR of at least 1.25. This means that for every dollar of mortgage payment, the property must net $1.25 in NOI. While the maximum LTV might be 80%, the property still needs to meet the debt service requirements. Due to higher market rates in 2025, many properties will only cash flow at 65% or 70%. It is important to calculate both LTV and DSCR when looking for a new apartment loan.

San Francisco lenders look for quality properties with high historical occupancy in excellent neighborhoods. Certain asset classes are preferred today based on current market conditions. Apartment properties and investment grade retail, warehouse, and industrial properties with long leases are always in high demand. The risk of default with these properties is typically lower. Riskier deals include properties with short term leases, properties with high vacancy rates, and properties in remote or rural locations. Certain asset classes are not in favor today, such as general office properties. Ever since the work from home policies enacted during the Covid period (many of which still remain in place) office properties have lagged the market.

Most new loans today will have rates that are higher than the rates many borrowers obtained five to ten years ago. As these loans come up for renewal, some borrowers will be forced to refinance at today's higher rates. Those borrowers might find that the new loan does not cash flow as well as their previous loan and might need to pay down the balance. Some borrowers who refinance now are doing so to free up cash for other investments. Borrowers will need to decide if that makes sense in today's market. We are not seeing a lot of purely discretionary refinancing right now due to higher market rates. Once rates soften, we expect to see more borrowers refinance their apartment building loan to improve terms or pull equity for upgrades.

Applying for a San Francisco HUD apartment loan is similar to applying for a regular commercial loan with your bank. The lender will want to see a current rent roll showing at least 90% occupancy, a 12 month operating history showing the necessary cash flow to support the new loan, sufficient apartment experience, good net worth and cash liquidity, and a strong credit profile. Loans that do not meet HUD, Fannie Mae, or Freddie Mac standards might still qualify for a bank or credit union loan. The lender will tell you up front which lending options are best for you.

Applying for a San Francisco Freddie Mac apartment loan is similar to applying for a regular loan with your bank. The lender will want to see a current rent roll showing at least 90% occupancy, a 12 month operating history showing the necessary cash flow to support the new loan, sufficient apartment ownership experience, good net worth and cash liquidity, and a good credit rating. Loans that do not meet HUD, Fannie Mae, or Freddie Mac standards might still qualify for a bank or credit union solution. Your lender will present the best fit.

Applying for a San Francisco Fannie Mae apartment loan works much like any other application for apartment building financing. The lender will review a current rent roll showing at least 90% occupancy, a 12 month operating history, cash flow that can support the proposed debt service, borrower experience, net worth, liquidity, and credit standing. If the loan does not meet Fannie Mae, Freddie Mac, or HUD standards, you may still qualify with a bank, credit union, or private apartment lender.

Most apartment loans today are fixed for 5, 7, or 10 years and come with a 25 to 30 year amortization schedule. Loans can be recourse (personal guarantee) or non recourse (no personal guarantee). Apartment building loan programs typically carry some form of prepayment penalty, whereas many residential home loans do not. Specific terms will be determined by your lender's underwriting team after your application is reviewed.

San Francisco apartment loan lenders typically lend up to 75% to 80% on an apartment purchase (down payment of 20% to 25% necessary). On other types of commercial property, apartment lenders will typically lend up to 70% to 75% (down payment of 25% to 30% necessary). An exception is for owner occupied business real estate, where an owner/user may qualify for up to 90% LTV financing.

San Francisco apartment loans are evaluated differently from residential loans. Residential lenders base their decisions on the borrower's income and creditworthiness, while commercial apartment lenders focus on the property's cash flow, operating statements, rent roll, and other financial metrics. Higher perceived risk in certain commercial properties can lead to higher rates. Strong, well performing properties with consistent income can qualify for better pricing and more attractive apartment building financing terms.

The best commercial properties to invest in 2025 are those with high historical occupancy in strong locations. Apartment properties and investment grade retail, warehouse, and industrial properties with long leases are preferred due to their lower risk profile. Riskier properties include those with short term leases, high vacancy rates, or locations in rural areas. General office properties remain less desirable due to work from home trends in many markets.

Refinancing an apartment loan or apartment building loan involves determining whether the new terms meet your goals, such as lowering rates, reducing payments, or freeing up cash. Higher rates in 2025 can make refinancing challenging, with some borrowers needing to inject additional cash. Once rates soften, refinancing may become more favorable for many property owners, especially those planning renovations or other value add improvements.

To apply for an apartment loan, you will need to provide financial documentation, including a rent roll, operating statements, and borrower financials (net worth, liquidity, and credit score). The lender evaluates both the property profile and the borrower profile to determine loan eligibility and pricing. A qualified mortgage broker can help position your request with the right apartment lenders and identify the best apartment building financing options for your situation.