First, who this page is not for. A CMBS (commercial mortgage-backed securities) loan is not a small-balance product, not a product for transitional property, and not a product for a borrower who may need to negotiate mid-loan. It exists for larger, stabilised properties whose owners value two things above flexibility: a long fixed rate and genuine non-recourse borrowing. If your deal is small, value-add, or likely to be sold or refinanced early, read this page as an explanation of why the product will decline you — and why you should be relieved. For everyone else, the mechanics below explain a financing structure unlike anything else in this cluster: your lender sells your loan, and that single fact drives every term in it.
General information, not financial advice. Structure bands and minimum sizes below are attributed to the conduit guides that published them; loan documents govern any individual deal.
The sequence: a conduit originator makes the loan; the loan is pooled with others and sold into a securitisation trust; the trust issues bonds to investors; and your loan is thereafter serviced by the trust’s servicers under the pooling documents. Every distinctive CMBS feature flows from that chain. Pricing is efficient because bond investors fund you. Documents standardise because thousands of loans must behave identically inside a trust. And flexibility disappears: modifications, assumptions and consents follow the pooling agreement, not a relationship. Compare the opposite pole — a portfolio loan, kept on one lender’s balance sheet with that lender able to say yes — and you understand the product better than most rate tables teach it.
Attributed conduit-guide bands (Janover, Linton, Willowbrook, PeerSense and similar lender/broker guides, observed October 2026):
The lender’s remedy is generally limited to the property: if the deal fails, the trust takes the building, not your other assets. But “non-recourse” never means “no personal liability for anything.” Standard bad-boy carve-outs restore full or partial personal liability for matters such as:
The carve-out list in your own documents is the version that counts — read it before signing, because it converts a non-recourse loan into a recourse one precisely in the situations where everyone is already in trouble.
CMBS prepayment is the most restrictive in this cluster, by design — bond investors bought a defined cash-flow stream and the documents protect it. The typical sequence is an initial lockout (commonly around two years in several guides) during which prepayment is prohibited outright, then a choice of two mechanisms, with an open window only near maturity (the final ~3–6 months in some guides):
One economics point the SERP gets wrong, stated correctly here: the cost of defeasance and yield maintenance is driven by the gap between your loan coupon and replacement Treasury yields. Falling rates generally make exit more expensive — the replacement securities cost more, and the yield differential widens — while higher replacement yields can reduce it. Pages claiming cheap exits in a falling-rate environment have the direction backwards. Model the cost before you assume an early exit exists; for many borrowers it effectively does not, which is a signing decision, not a surprise to discover in year four. Assumptions and transfers sit under the same rigidity: a buyer can sometimes assume a CMBS loan, but only through the servicer’s consent process on the trust’s timetable.
Published minimums conflict, so this page prints them source by source rather than inventing a consensus:
| Source (conduit guides/desks, observed Oct 2026) | Stated minimum |
|---|---|
| Janover and several conduit pages | $2 million |
| Linton and other guides | $3 million (sometimes $5M+) |
| Willowbrook (practical conduit floor) | $5 million — $2–3M possible only for high-quality assets in primary markets, at worse pricing with fewer lenders |
| PeerSense (named desk) | $10 million and up |
The honest reading: below roughly $5 million the conduit market thins quickly, whatever a “$2M minimum” page implies. Pricing data for the loans that do close lives in the rates snapshot, including SEC-filed medians for 5- and 10-year conduit loans.
A larger, stabilised, income-documented property; an owner who prizes non-recourse and a decade of fixed rate over any mid-term flexibility; and a hold period that matches the term, so the prepayment regime never has to be tested. If that is your deal, CMBS is often the cheapest money in this cluster per unit of risk transferred. If it is not, the products in the types comparison exist precisely for you.
What is the minimum loan amount for a CMBS loan? There is no market-wide figure. Published minimums run from $2 million (Janover and several conduit pages) through $3 million (Linton and other guides) to a $5 million practical floor (Willowbrook) and a $10 million desk minimum (PeerSense). Treat any single number as that source’s floor, and expect the practical market to thin sharply below about $5 million.
Can I prepay a CMBS loan? Eventually, and at a price. Most CMBS loans begin with a lockout period (commonly around two years) when prepayment is prohibited, then allow exit only through defeasance or yield maintenance, with an open prepayment window near maturity. Budget the mechanism’s cost — driven by the gap between your coupon and current Treasury yields — before assuming an early exit is available.
Is CMBS financing non-recourse? Generally yes: the trust’s remedy is the property. But standard bad-boy carve-outs restore personal liability for fraud, misrepresentation, voluntary bankruptcy, misappropriation of rents or proceeds, environmental liability and prohibited transfers or debt. Non-recourse describes the lender’s remedy for a failed deal, not immunity for the borrower’s own acts.
What is defeasance and why do CMBS loans use it? Defeasance substitutes collateral: the borrower buys a portfolio of government securities engineered to make the loan’s remaining payments, the loan stays inside the securitisation trust so bondholders are unaffected, and the real estate is released for sale or refinance. CMBS loans use it because the trust cannot simply be paid off mid-stream without disturbing the cash flows investors bought.
What are CMBS prepayment penalties? Strictly, defeasance and yield maintenance are not penalties but replacement mechanisms: defeasance costs the price of the Treasury portfolio that replicates your remaining payments (plus transaction costs), and yield maintenance is a payment preserving the investors’ expected yield, computed per your loan documents. Either can reach several percent of the loan balance, and both grow more expensive when market rates have fallen since origination.
What are the pros of CMBS loans? Fixed rates for 5–10 years, non-recourse borrowing, competitive pricing on larger stabilised assets, and none of the relationship covenants of bank lending. The cons are the mirror image: rigid prepayment, standardised documents with no negotiation room, servicer-driven administration, and minimum sizes that exclude smaller properties.
General information, not financial advice. Sources: shared fact bank, LessOwe cluster 1.3 research (2026-10-23) — CMBS structure, prepayment mechanics, carve-outs and minimum sizes as published by Janover, Linton, Willowbrook, PeerSense, First Realty Capital and allied conduit guides, observed October 2026. Currency verified 2026-10-23.