2026 is shaping up to be a banner year for commercial real estate – based, of course, on which sector you invest in. While affordable housing remains the hot topic, office, lodging and retail will be in the dumpster for years to come. But regardless of what niche of real estate you're into, there's one item that's a constant and that's obtaining a loan to buy your deal. And in 2026, here are the classic ways to financing your acquisition.
Deals under $1 million have basically two options
If you're looking at a property that costs under $1 million then you have two angles of attack:
- Seller financing. In this structure, the seller also becomes the bank and creates a mortgage to match your down-payment. There are some great things about seller financing that include:
- Potential for lower down-payment than the traditional 20%. Sellers have been known to go as lot as zero down. There are no rules on this.
- Lower interest rates than banks offer. Sellers have no limitations on what the interest rate can be – there's no Board of Directors to answer to. Often the seller will go with a rate that is similar to what CDs are paying, which can be several points lower than a bank.
- Non-recourse debt. Virtually all seller notes are of the desirable non-recourse construction which means that, if you ever defaulted, they can't come after you for the deficiency.
- Local Bank. Typically having one branch to just a handful, this is a bank that has less bureaucracy and already knows the market because it's located there. Getting to a decision-maker is not hard and smaller banks are always looking for commercial real estate loans, as opposed to business start-ups. Figure on interest rates that are higher than most other options and often length of loan that is shorter than other options – typically five years.
Deals $1 million and higher
There are many more great options on deals that are $1 million or more in price. These include:
- Seller Financing. Same story as above as sellers have no limitations on this construction.
- Local Bank. Even on bigger deals, local banks are an option (although not normally the best one).
- Loan Brokers. This can be an excellent option. A good loan broker like Bellwether Enterprises out of Denver can find you a loan with superior rates and terms and often will give you three good options and then let you pick the winner. Expect much better options than a local bank can offer.
- Regional Bank. The larger version of the Local Bank with the same drawbacks.
- CMBS Debt. Also known as "Commercial Mortgage-Backed Security" and "Conduit Debt" these are loans that are packaged by a sponsor and then sold on Wall Street to the investing public. These loans have some terrific benefits including:
- Non-recourse. Same as seller-financing in that you have no additional risk if you default.
- Low interest rate. These deals have rates that are often a point or more lower than local bank rates.
- Ten-year term. These loans typically have a term that's a decade long, which is very desirable.
- Assumability. CMBS loans can often be assumed by a future buyer, which can be a huge benefit as it's always easier selling something with a built-in mortgage.
- Fannie Mae/Freddie Mac. THIS IS ONLY AN OPTION IF YOU ARE BUYING MOBILE HOME PARKS OR APARTMENT BUILDINGS. This is a financing option only available to housing sectors. These loans are among the most desirable on earth for many reasons:
- The lowest interest rates. No other loan option can compete – except for seller carry.
- The longest terms. These loans can be up to 12 years in length.
- The ability to re-size frequently. This allows you to actually pull additional cash out of your deal with each increase in rents and net income – no other lender does that.
- Non-recourse. The best option for safety.
A lot of options yield a high degree of success
One thing is for sure in 2026 – there's a lot of loan options (particularly in the housing niches). And because there are so many ways to get a loan there is an extremely high probability you will obtain a good one. You rarely hear of a good real estate deal being unable to find suitable financing. Even though you hear stories of lending difficulty, those are centered around office, retail and hotels – the three sectors you would probably not want to touch at this point as they have been crushed by the internet.