Short answer: if your DSCR is too low to refinance, the lender is telling you the property's income can't carry a loan the size of your payoff at today's rate. The building didn't get worse. The payment got bigger. You close the gap by shrinking the payment (longer amortization, interest-only with a lender that sizes on it), growing the income before you lock permanent debt (a bridge), or covering the difference (equity, a second-position piece, or a sale). Start 9 to 12 months before maturity so you get to choose.
It's one of the most frustrating calls we take. An owner has a full, well-run building, rent collected, expenses under control, and the bank just said it won't refinance the loan. At least not at the balance they owe. The property is performing. To the lender, at the leverage it used to carry, it's unbankable. That's a math problem with known fixes, and the first step is running the math yourself.
Got told "no" on a refinance that should pencil? That's usually a lender-fit problem, not a property problem.
Get a free refinance review →What "DSCR too low to refinance" means
Debt-service coverage ratio (DSCR) is net operating income divided by annual debt service, and it "measures the borrower's ability to service its debt," in the words of the OCC Comptroller's Handbook on commercial real estate lending (Office of the Comptroller of the Currency).
DSCR = Net Operating Income ÷ Annual Debt Service
A 1.25x DSCR means the property earns $1.25 for every $1.00 of mortgage payment. Every lender sets a minimum. Fannie Mae's conventional multifamily loans require 1.25x, per the Fannie Mae loan summary on multifamily.loans (rates as of August 11, 2026). Banks set their own, and the OCC tells them the right level depends on the amortization period and how volatile the cash flow is. A property with long net leases to strong tenants can justify a lower ratio, and one with volatile income a higher one.
When the coverage at the new rate comes in below the lender's minimum, the lender shrinks the loan until it fits. If the smaller loan doesn't pay off your old one, you have a refinance gap.
Worked example: the same building, two rates
Illustrative only. The inputs are round numbers chosen to show the mechanics, not a quote, an offer or a deal we closed.
- The property: a stabilized apartment building with $500,000 of NOI.
- The old loan: $6,500,000 in 2021, a five-year term at 3.75% on a 30-year amortization. Annual debt service is about $361,200, so DSCR is about 1.38x. After five years of payments, the balance due at maturity is about $5,855,000.
- The refinance at a 1.25x minimum: the most debt service the property can carry is $500,000 ÷ 1.25 = $400,000 a year.
- At 6.5% on a 30-year amortization, $400,000 a year supports a loan of about $5,274,000. Gap to the payoff: about $581,000.
- At 7.0%, the same $400,000 supports about $5,010,000. Gap: about $845,000.
Same tenants, same rent roll, same expenses. Half a point of rate moved the check the owner has to write by roughly $264,000. For scale on where rates sit, the 10-year Treasury par yield was 5.24% on September 28, 2026 (U.S. Treasury) and SOFR was 3.90% the same day (Federal Reserve Bank of New York). Fixed commercial loans price at a spread over indexes like those. Your spread depends on the property, the leverage and the lender.
Want your real DSCR-constrained loan amount at today's rates? We'll run it before a lender does.
Pressure-test my refinance →The second test: debt yield
Some lenders also check debt yield, which is NOI divided by the loan amount. The OCC describes it as a measure of risk "independent of the interest rate, amortization period, and capitalization rate" and notes that lenders use it to set loan amounts that are less vulnerable to higher rates. In the example above, a $5,274,000 loan on $500,000 of NOI is a 9.5% debt yield. The old $5,855,000 payoff would be 8.5%. If a lender has a debt yield floor above what your payoff implies, a lower rate won't fix it. Only more income or a smaller loan will.
This is happening across the market
About $875 billion of commercial and multifamily mortgages, 17% of the $5.0 trillion outstanding, was scheduled to mature in 2026, according to the Mortgage Bankers Association's 2025 Survey of Loan Maturity Volumes (MBA Newslink, February 10, 2026). Stress shows in the multifamily numbers. Trepp put the multifamily CMBS delinquency rate at 7.71% in April 2026, a new high and up 114 basis points from a year earlier (Yield PRO, May 4, 2026), and it was 7.69% in August 2026 (Trepp data via Multifamily Dive, September 16, 2026).
Credit hasn't frozen, though. In the Federal Reserve's July 2026 Senior Loan Officer Opinion Survey, "moderate and modest net shares of banks reported having eased standards" on loans secured by nonfarm nonresidential and multifamily properties (Federal Reserve, July 2026 SLOOS). One bank's "no" says more about that bank's coverage minimum and balance sheet than about whether your building can be financed. For the weekly picture, see our June 2026 CRE market update.
The "cash-in" refinance
When the new loan is smaller than the payoff, someone covers the difference, and more often it's the owner. MMG Real Estate Advisors describes owners being forced "to inject additional cash or secure alternative capital," with many turning to mezzanine loans or preferred equity to fill the space between senior proceeds and the payoff (MMG Real Estate Advisors). A cash-in refinance is sometimes the right answer. Run the other options first, because the gap one lender quotes is often not the gap the market quotes.
What to do now
- Start 9 to 12 months before maturity. Every option below takes time to arrange, and inside 90 days most of them are gone.
- Re-run your DSCR at today's rate, not your old one. Use a realistic current rate and your lender's actual coverage minimum to find the loan your NOI supports. Compare it to your payoff, not your original loan amount.
- Clean up the NOI. Correct add-backs, market expenses and reserves. Sloppy numbers cost proceeds before a lender ever looks at the rate.
- Check debt yield too. If NOI divided by your payoff is low, rate shopping alone won't close the gap.
- Don't stop at your current bank. Its coverage minimum and appetite are one data point, and the July 2026 SLOOS shows other banks easing.
The structures that still close a DSCR gap
- A different lender. Banks, agencies, debt funds, CMBS, life companies and private credit set different coverage minimums and size loans differently.
- A longer amortization. Moving from 25 years to 30 lowers annual debt service, which raises coverage and the supportable loan.
- Interest-only, with the right lender. IO lowers the payment, but the OCC tells banks that an IO property "should nonetheless meet the bank's repayment capacity (debt service coverage) requirements as though the loan were amortizing." At a bank, IO may not raise your loan amount at all. Ask each lender which payment it sizes on.
- Bridge-to-permanent. A short-term commercial bridge loan pays off the maturing debt and buys time to raise NOI through lease-up, expense fixes or a finished renovation, then a permanent loan takes it out at a healthier DSCR. See also our loan programs.
- A supplemental or mezzanine piece. Second-position capital behind a sized-down senior loan can close part of the gap without one large equity check.
- A right-sized equity paydown. Sometimes it's the cheapest answer, once you've confirmed the check is smaller than the first number you were quoted.
- A negotiated extension. The OCC lists "a renewal or extension of loan terms" among the workout forms banks use. It works best as a bridge to a plan you already have.
Industrial owners run into the same gap for a different reason, lease term against loan term, covered in what to do when an industrial refinance quote falls short. If your maturity date is the pressure point, read what to do when a balloon payment is coming due, and if your lender has already declined, your options when the bank won't renew.
Have a $5M–$30M loan maturing into a DSCR gap? Let's find the structure that closes it.
Book a 30-minute strategy call →Frequently asked questions
What does "DSCR too low to refinance" mean?
Your property's net operating income doesn't cover the new loan's payment by the margin the lender requires. The lender will shrink the loan until coverage fits, or decline. If the smaller loan is less than your payoff, you have a refinance gap to fill.
My property still cash-flows. Why can't I refinance the same amount?
Coverage is measured at today's rate. In the example above, a building with $500,000 of NOI that carried its 3.75% loan at 1.38x supports only about $5.27 million at 6.5% and a 1.25x minimum, against a $5.86 million payoff. The property performs. The math supports a smaller balance.
Can I refinance with a DSCR below 1.25x?
Sometimes. Minimums vary by lender and program, and the OCC tells banks a lower ratio can be prudent for stable cash flows such as long net leases to strong tenants. Otherwise the usual routes are a smaller loan plus equity, a bridge loan while you raise NOI, or a lender that sizes on a lower payment.
Does interest-only help my DSCR?
It lowers the payment, so coverage on the IO payment looks better. But banks are expected to test coverage as though the loan amortized (OCC Comptroller's Handbook), so IO raises proceeds only with lenders that size on the IO payment. Ask before you count on it.
What is a cash-in refinance?
The opposite of a cash-out. You bring money to closing to pay the new loan down to a size the property can support. Run the full market before assuming you need one, because the gap is often smaller with a different lender or structure.
How early should I start before my loan matures?
Nine to twelve months out. That window lets you fix NOI or documentation issues, run a competitive process and set up a bridge or other structure if you need one. Inside 90 days, lenders know you're against the clock.
What does a commercial mortgage broker do that my bank won't?
We know which of 700+ lenders is competing for a deal like yours right now, how each one sizes coverage, and which will look past a gap your bank won't. We take your property to the lenders most likely to win it, structure around the gap, and manage the deal to closing, typically in 15–30 days. We're a broker, not a lender, on $5M–$30M commercial real estate debt, and our fee is a 1% origination fee paid only at closing.
Next step
Northern Ridge Capital places $5M–$30M commercial debt by matching your deal to the right lender from a network of 700+ (banks, debt funds, family offices, CMBS and private capital), typically closing in 15–30 days. If your loan is maturing into a DSCR gap, run your numbers now and run the whole market across the markets we serve.
Don't let a rate reset strand a good property.
Talk to Northern Ridge Capital →Coverage is one of several ways a refinance comes back smaller than you need. Commercial property refinance covers the others, including a bank that will not renew and a balloon with a date on it.
Northern Ridge Capital is a commercial mortgage brokerage (a broker, not a lender), arranging financing on commercial real estate only, not residential or owner-occupied consumer property. Justin Ashcraft, President · CA DRE #02093377. We work only within our licensed footprint. The worked example is a simplified illustration of how debt-service coverage works and is not a quote, offer, or indication of terms; actual rates, DSCR requirements, and loan sizing vary by lender, property, and sponsor. Market data referenced is drawn from third-party sources (including the Mortgage Bankers Association, the Fannie Mae Multifamily Guide, the OCC Comptroller's Handbook, the Federal Reserve, the Federal Reserve Bank of New York, the U.S. Treasury, Trepp via Yield PRO and Multifamily Dive, and MMG Real Estate Advisors, as dated in the text) and is provided for general information. Rates and market conditions change. Nothing here is financial, legal, or tax advice.