Is Your Loan Coming Due? 4 Options for Bay Area Property Owners at Today's Rates

If you bought or refinanced a Bay Area apartment or commercial building between 2019 and 2021, there is a good chance your loan is coming due in the next 12 to 24 months. Those loans were written at 3–4%. Today's rates are very different, and so is the math on what happens next.

This guide explains what has changed, how lenders are sizing new loans, and the four options every owner should weigh before their maturity date arrives.

Why 2026 and 2027 Are Different

As of late October 2026, the 10-year Treasury is near 5.0%, its highest level since 2007. New commercial and multifamily loans are pricing around 7%. The Federal Reserve's own projections do not show rates meaningfully lower until 2028.

At the same time, a large wave of loans is coming due. Roughly $875 billion in commercial real estate mortgages mature in 2026, with another $652 billion due in 2027. Lenders have also become less willing to simply push deadlines back. They extended about 41% of maturing loans into 2025, but only about 21% into 2026. When extensions are granted, they now often come with a paydown, a higher rate or new guarantees.

What a Lender Will Actually Lend

When you refinance, a lender sizes the new loan using three tests and lends the lowest of the three:

• Debt service coverage (DSCR): your net operating income (NOI) divided by the annual loan payment, typically 1.25x to 1.45x.
• Loan-to-value (LTV): the loan divided by the property's value, typically 60% to 65%.
• Debt yield: NOI divided by the loan amount, typically 10% or more.

Here is an illustrative example. An owner bought a building in 2020 for $12.0 million at a 5.0% cap rate, with a $7.8 million interest-only loan at 3.75%. NOI has grown 10%, from $600,000 to $660,000. But cap rates have moved from 5.0% to about 6.5%, so the building is worth roughly $10.15 million today.

At a 7% rate with 30-year amortization, the lowest of the three tests supports a loan of about $6.29 million. To refinance, the owner would need to pay down about $1.51 million, and would then earn roughly a 4.1% pre-tax cash yield on their equity, less than a 10-year Treasury pays. The property performed. The money changed.

Your Four Options

1. Refinance

Keep the property and replace the loan. This works best when today's sizing covers most or all of your balance. The questions to answer: how large is the paydown gap, where would the cash come from, and what will your equity earn afterward?

2. Sell

Lock in today's value and remove the refinance risk entirely. Pricing matters: in recent months, more than half of relisted properties came back at a lower asking price, with an average reduction of about 7.5%. Pricing correctly from day one tends to produce stronger results than starting high and cutting later. Taxes and any prepayment costs will reduce proceeds, so plan with your CPA.

3. Recapitalize

Bring in a partner or preferred equity to fund the paydown and keep the asset. You keep ownership and future upside, but you share returns, and control depends on the terms you negotiate.

4. Extend

Ask your current lender for more time. This can bridge you to a better moment, but lenders are extending fewer loans and usually set the terms: a paydown, a higher rate or new guarantees. Start that conversation early.

The Cost of Waiting

Waiting can feel like the safe choice, but it carries its own risk. In the example above, if cap rates moved from 6.5% to 7.0% while the owner waited, the building's value would fall by about $725,000, roughly 31% of the owner's remaining equity. Rates could also fall, and that scenario deserves a fair look too. The question is whether you can afford to be wrong. A sale also typically takes 90 to 120 days, so decisions need to be made well before the maturity date.

Questions to Ask Before Your Maturity Date

• When exactly does my loan mature, and does it have extension options or prepayment penalties?
• Would today's rates and lender sizing cover my current balance?
• If I have a floating-rate or bridge loan, when does my rate cap expire?
• What would I net from a sale today, after costs and taxes?
• Have I compared all four options side by side, using my property's real numbers?

Get Your Free Hold / Sell / Refinance Analysis

You don't necessarily need to sell. But understanding your numbers early gives you time to choose the right path on your own terms, instead of on your lender's timeline.

I'll prepare a complimentary one-page analysis for your property showing what a lender will likely lend today, any paydown gap, estimated sale proceeds, and your recapitalization and extension options. We'll walk through it together in about 20 minutes, with no obligation.

Request your free loan maturity analysis

Questions? Contact Hanna John Azar, Broker-Associate, Compass Commercial, at 415.875.0177 or [email protected].

Market data as of October 28, 2026, from Trading Economics, the Federal Reserve, the Mortgage Bankers Association, First American, and Realmo via TheStreet. The example is illustrative; loan terms are indicative and must be confirmed with live lender quotes. Values are broker opinions, not appraisals. This article is for informational purposes only and is not legal, tax, lending or investment advice. Consult your attorney and CPA before making any decision. DRE #02005698.