Senior debt

The senior loan is the cheapest and largest layer, and it sets the rules for everyone above it. It holds a mortgage on the property and gets paid first, from operating cash and from a sale.

What it costs

Altus Group’s Q2 2026 survey of lender quotes put fixed-rate 10-year senior loans at an average of 195 bp over the 10-year Treasury at 65% LTV or less, and 249 bp above 65%. Five-year fixed loans averaged 216 bp and 313 bp over the 5-year Treasury. Floating senior loans averaged 239 bp and 332 bp over Term SOFR. The jump between the two LTV bands is the market’s price for the last ten or so points of loan-to-value.

CBRE’s survey of loans it originated or brokered gives the closed-loan view: an average commercial spread of 204 bp in Q2 2026, at an average LTV of 59.6% and DSCR of 1.43.

What limits it

• Bank supervisory LTV limits. The interagency supervisory guidelines set 85% of value for improved property and 80% for commercial and multifamily construction, with room for exceptions (12 CFR 365, Appendix A).
• HVCRE. A bank construction or land loan is a “high volatility” exposure, carrying a 150% risk weight under 12 CFR 324.32(j), unless it fits an exclusion. The one most developers use requires LTV at or under the supervisory maximum and borrower capital of at least 15% of the “as completed” value, contributed before the bank funds. The HVCRE 15% rule has the detail.
• Agency program rules. Freddie Mac’s conventional term sheet allows up to 80% LTV at a 1.25x DCR on terms of seven years or more.

How it restricts the layers above

Most senior loans forbid other debt secured by the property. A 2026 CMBS prospectus (BBCMS 2026-5C43, filed October 14, 2026) says the loans in its pool “generally prohibit borrowers from incurring any additional debt secured by their Mortgaged Property without the consent of the lender”, and that where future mezzanine is allowed it must meet a combined maximum LTV, minimum DSCR and minimum debt yield. Fannie Mae’s Multifamily Guide (§1501.01) allows mezzanine behind its loans only from an approved DUS lender affiliate, or from another source Fannie approves case by case, on loans of at least $10 million or $50 million respectively.

So decide the whole stack before you sign the senior term sheet. Adding a layer later is a negotiation you may not win.