South Florida CRE Financing in 2026: DSCR Loans, Regional Banks, and the Debt Stack You Actually Need

The debt stack matters more than the cap rate

Most investors spend weeks obsessing over cap rates and rental comps, then hand the debt piece to a broker three days before close and wonder why the return profile collapsed. The financing structure is half the deal, sometimes more than half when you're buying in a high-rate environment like 2026. This post walks through the four capital sources that actually fund commercial real estate transactions in Palm Beach, Broward, and Miami-Dade, and when each one fits the asset you're buying.

The punchline: you don't pick the lender based on who has the lowest rate. You pick based on which lender underwrites the deal you actually have, and then you structure the asset to meet their box.

Regional banks: relationship-driven, recourse, and best for stabilized sub-$10M deals

Regional banks are the workhorse lender for stabilized multifamily, retail, office, and industrial deals under $10M in South Florida. Think sub-50 unit multifamily in Delray Beach, single-tenant NNN retail in West Palm, owner-user industrial in Pompano. These deals don't need Fannie Mae and don't fit CMBS minimums, they need a local banker who knows the market and will close in 45 days.

The regional bank box:

• 65-75% LTV (sometimes 80% if the sponsor is bulletproof and the asset is irreplaceable)
• Full recourse or carve-out recourse
• 1.25x DSCR minimum, usually targeting 1.35x+
• Amortization: typically 25-year am on a 5/1 or 7/1 ARM, occasionally 20-year
• Rates tied to SOFR + spread (call it SOFR + 250-300 bps for stabilized, SOFR + 325-375 bps for value-add)

South Florida picks that actually close:

• Truist, strong multifamily appetite in Palm Beach County, consistently competitive on 20-80 unit deals
• City National Bank of Florida, Miami-Dade footprint, relationship-heavy, will stretch on LTV for repeat borrowers
• BankUnited, Fort Lauderdale HQ, aggressive on Broward County retail and office
• First Horizon, underrated player on NNN and single-tenant retail across all three counties
• Banesco USA, Coral Gables-based, strong Latin America sponsor relationships, excellent on mixed-use and value-add multifamily in Miami proper

The kicker with regional banks: they underwrite the sponsor as much as the asset. If you're a first-time buyer with thin liquidity and no track record, you're going to struggle at 75% LTV even if the deal pencils. If you've closed three deals with the same banker and never missed a payment, you might get 80% LTV on something another lender wouldn't touch. This is a relationship business, pick a bank, feed them deals, and don't shop every loan to five lenders every time.

DSCR loans: non-recourse, asset-only underwriting, best for 1-4 unit and small multifamily

DSCR (Debt Service Coverage Ratio) loans are the go-to for investors buying 1-4 unit residential investment properties and small multifamily (5-20 units) in South Florida. These are non-recourse, no-income-verification loans that underwrite purely on the property's cash flow. If the rent covers 1.25x the debt service, you get the loan, your personal tax returns don't matter.

The DSCR box:

• 75-80% LTV on investment SFRs, duplexes, triplexes, quads
• 70-75% LTV on 5-20 unit multifamily
• 1.25x DSCR floor (some lenders will go to 1.0x for exceptional assets)
• Non-recourse (huge advantage over regional bank recourse on small deals)
• Rates are higher than agency or bank, call it 7.5-8.5% in the current environment, depending on LTV and term
• 30-year fixed available, or 5/1, 7/1, 10/1 ARMs

DSCR loans are purpose-built for the fix-and-hold investor buying cash-flowing rental inventory in Boca Raton, Boynton Beach, Deerfield Beach, Hollywood, Doral. You're not getting Fannie Mae execution on a fourplex, but you're also not signing a personal guarantee, and you're closing in 30 days with minimal documentation.

The trade-off: higher cost of capital than agency or bank debt. You're paying for speed, non-recourse, and the fact that the lender doesn't care about your W-2. If you're buying a stabilized duplex in Delray Beach at a 6 cap and financing it at 8%, your levered return is getting squeezed, underwrite to the debt service you're actually going to pay, not the memorialized rate you wish you had.

Agency multifamily: Fannie Mae and Freddie Mac, lowest cost of capital, slowest to close

Fannie Mae and Freddie Mac multifamily loans are the gold standard for stabilized workforce housing deals of 5+ units. Lowest rates in the market, non-recourse, 30-year fixed available, and you can lever up to 80% LTV (sometimes more with affordable housing overlays). The catch: you're looking at 60-90 days to close, and the underwriting is thorough.

The agency box:

• 75-80% LTV (higher for affordable, workforce, or green certifications)
• 1.25x DSCR minimum
• Non-recourse
• Rates: call it mid-6% range for 10-year fixed, low-to-mid 6% range for 7-year fixed in today's treasury environment (March 2026, 10-year treasury ~4.2%, spreads ~200-225 bps)
• Property must be 5+ units, stabilized (90%+ occupancy for trailing 90 days)
• Supplemental financing and cash-out refis available on existing agency-financed properties

When agency makes sense:

• You're buying a 40-unit garden-style multifamily complex in Wellington at a 5.5 cap and holding long-term
• You're refinancing a 60-unit value-add deal in Pompano Beach that you stabilized two years ago and want to pull equity out at the lowest rate possible
• You have time, agency loans do not close in 30 days, and trying to force them into a tight escrow is a recipe for disaster

When agency does NOT make sense:

• You're buying a 12-unit value-add deal in Little Havana that's 60% occupied and needs $500K of deferred maintenance, Fannie and Freddie want stabilized, not value-add
• You need to close in 30 days
• The deal is under $2M (agency has informal minimums; most correspondent lenders won't touch sub-$2M)

The agency game is all about correspondent lenders, find a mortgage banker who does high volume with Fannie/Freddie and knows how to package the deal correctly the first time. Bad correspondents will burn 90 days and come back asking for more docs; good ones will tell you on day one whether the deal fits the box.

For stabilized multifamily deals in Palm Beach County or Broward County where you're holding 7+ years, agency is the move. Full stop.

CMBS: $5M+ stabilized, 10-year fixed, best for single-tenant NNN and large retail/office

CMBS (Commercial Mortgage-Backed Securities) loans are the go-to for stabilized income-producing commercial real estate above $5M where you want a long-term fixed rate and non-recourse execution. Think single-tenant NNN retail in Miami-Dade, 50,000 SF office buildings in Boca Raton, or anchored shopping centers in Fort Lauderdale.

The CMBS box:

• $5M minimum loan size (some conduits will go to $3M, but $5M is the practical floor)
• 65-75% LTV
• 1.25x DSCR minimum
• Non-recourse (with standard carve-outs for fraud, bankruptcy, environmental)
• 10-year fixed rates are the bread and butter, call it low-to-mid 6% range in the current environment
• 25-30 year amortization
• Locked-out prepayment for the first 2-3 years, then defeasance or yield maintenance

CMBS underwrites to the asset, not the sponsor. If the property cash flows at 1.30x debt service and the tenant has an investment-grade credit rating, you're getting the loan, your net worth and liquidity matter far less than they do with a regional bank. This is both a feature and a bug: it's easier to qualify as a borrower, but you're also locked into a rigid loan structure with brutal prepayment penalties if you need to exit early.

When CMBS makes sense:

• You're buying a single-tenant Walgreens on a 15-year lease in West Palm Beach and want to match the lease term to the loan term
• You're acquiring a 60,000 SF industrial building in Doral with a 10-year lease to a credit tenant and want the lowest fixed rate available
• You're holding long-term and have no intention of selling or refinancing in the next 5 years

When CMBS does NOT make sense:

• You're buying a value-add deal with near-term lease rollover, CMBS lenders want stabilized
• The loan size is under $5M (you're paying too much in upfront costs relative to the loan amount)
• You think you might sell or refi in 3-4 years, defeasance will eat your lunch

CMBS is also where you see the largest spread compression between institutional-grade assets and everything else. A single-tenant CVS in Boca Raton on a 20-year lease might price at 5.75%, while a multi-tenant retail strip center in Coconut Creek with 3-5 year lease terms prices at 6.50%. The conduit is pricing credit risk, not just real estate risk.

When bridge debt and mezzanine financing enter the picture

None of the four boxes above work cleanly for value-add deals, heavy-lift repositions, or situations where you need more than 75% LTV to make the returns work. That's when bridge debt and mezz come into play, and both are expensive.

Bridge loans:

• 12-36 month terms
• Floating rate (SOFR + 400-600 bps depending on deal risk)
• 70-80% LTV (sometimes more if there's a clear value-add path)
• Used for: acquiring a distressed 30-unit multifamily deal in Boynton Beach at 50% occupancy, stabilizing it over 18 months, then refinancing into agency debt

Mezzanine debt:

• Sits behind the senior loan, takes the 75-90% LTV slot
• 10-15% rates (sometimes more)
• Used for: levering up when you need more proceeds than the senior lender will give you, or when you're trying to minimize equity in a high-IRR deal

Both are tools, not defaults. If you're buying a stabilized asset and considering mezz "because the seller won't come down on price," you're solving the wrong problem, the deal doesn't work, and adding expensive debt on top won't fix it.

Bridge and mezz make sense when there's a clear value-creation path and a defined exit into permanent financing. Buying a 40-unit deal in Delray Beach at 60% occupancy, spending $800K on deferred maintenance, stabilizing to 92% occupancy, and refinancing into Fannie Mae at 80% LTV in 24 months, that's a bridge loan use case. Buying a fully-stabilized NNN deal in Broward County at a 4.5 cap and using mezz to make the equity check smaller because "rates will come down", that's hoping, not underwriting.

Underwrite to the debt service you're actually paying, not the rate you memorized

The single biggest mistake I see investors make in 2026: they underwrite to a 6% mortgage rate because that's what they read in a headline, then they call a lender and find out the actual rate is 7.25% after points, fees, and spreads, and suddenly the deal that penciled at a 12% levered IRR is returning 8%.

The real all-in cost:

• Quoted rate (let's say 6.75%)
• • Origination fee (call it 1 point, or 1% of loan amount, amortized over the hold period)
• • Third-party reports (appraisal, Phase I environmental, survey, legal, $15K-$50K depending on deal size)
• • Prepayment penalty risk if you think you might exit early

Run your pro forma at the actual debt service payment the lender quotes you, not the memorialized rate. If the deal still works, buy it. If it doesn't work unless rates drop 100 bps, you're speculating, not investing.

Where SOFR and treasury spreads sit in March 2026

As of this writing (March 2026), here's the rate environment for South Florida CRE debt:

• 10-year Treasury: ~4.2%
• SOFR (30-day average): ~4.6%
• Agency multifamily spreads: 200-225 bps over 10-year treasury (call it 6.2-6.5% all-in for 10-year fixed)
• CMBS spreads: 175-250 bps over 10-year treasury depending on asset quality (call it 6.0-6.7% all-in)
• Regional bank SOFR + spread: 250-375 bps depending on asset and sponsor (call it 7.1-8.2% all-in)
• DSCR loans: 7.5-8.5% depending on LTV and term

These numbers move. By the time you read this, SOFR might be 50 bps higher or lower, but the spreads are stickier. Agency spreads don't swing 100 bps in a quarter; they move 10-20 bps. If you're modeling a deal today, use today's treasury rate + a reasonable spread assumption, and stress-test what happens if SOFR moves 50 bps in either direction.

The debt stack decision tree: match capital to the asset you actually have

Here's how to think about which debt source fits:

1. Is the deal stabilized (90%+ occupied, minimal deferred maintenance) and 5+ units? → Agency multifamily if you have 60-90 days. Regional bank if you need to close faster.

2. Is it a 1-4 unit rental property or a 5-20 unit small multifamily deal? → DSCR loan.

3. Is it a single-tenant NNN deal, large office, or anchored retail above $5M? → CMBS if you're holding 7+ years and want 10-year fixed. Regional bank if you want a shorter ARM and faster close.

4. Is it value-add, distressed, or sub-70% occupied? → Bridge loan. Plan your exit into perm financing before you buy.

5. Do you need more than 75% LTV and the deal actually supports the debt service? → Mezz, but only if the value-creation path is clear.

Don't force a square deal into a round debt box. I've seen buyers blow up $8M multifamily acquisitions in Palm Beach Gardens trying to jam them into CMBS when a regional bank would have closed in 30 days at comparable pricing, or worse, trying to force agency debt on a 60% occupied value-add deal that Fannie Mae was never going to touch.

The lender is telling you something when they say no, either the deal doesn't work, or you're talking to the wrong lender.

Where to go from here

If you're buying commercial real estate in South Florida in 2026 and you don't have the debt piece dialed in before you go under contract, you're flying blind. Loan quotes are non-binding until they're binding, get a term sheet from the lender before you waive your financing contingency, and make sure the rate, LTV, and DSCR assumptions in that term sheet match the pro forma you used to justify the purchase price.

We work with buyers every week who are halfway through due diligence before they realize the debt they thought they were getting doesn't exist, and by that point, they're either renegotiating price (if the seller will let them) or walking away from a hard deposit.

If you want to talk through the debt stack on a specific deal, or if you're looking for off-market opportunities in Palm Beach, Broward, or Miami-Dade where the financing assumptions are already baked into the underwriting, let's talk. I'd rather have that conversation on the front end than watch you overpay because the lender you thought you had fell through on day 45.

Best regards,