What Is a Life Company Loan?
A life company loan is a commercial mortgage originated by a life insurance company (MetLife, Prudential, New York Life, TIAA, Northwestern Mutual, etc.) that typically offers the lowest fixed rates in CRE — often 20-50 basis points below banks and CMBS. Life cos match long-duration insurance liabilities against long-term real estate assets, allowing them to price loans off Treasuries with tight spreads and offer 10-25 year fixed terms. The trade-offs: conservative leverage (55-65% LTV), strict prepayment penalties (yield maintenance or defeasance), highly selective property standards (Class A/B stabilized), and 60-90 day close timelines.
Key Facts
Why Life Company Rates Are the Lowest
Life insurance companies have a structural advantage no other CRE lender can replicate: liability matching. When someone buys a 20-year whole life policy, the insurance company needs long-duration, predictable assets to match. Commercial mortgages on stabilized properties are a near-perfect fit. Because life cos invest their own balance sheet capital (not securitizing into CMBS pools), they price loans off Treasury yields with spreads of 120-180 basis points. In practice, this means a life co 10-year fixed rate is often 20-50 basis points below the best bank or credit union quote.
Conservative Leverage and DSCR Requirements
Life cos are capital-preservation lenders. Maximum LTV ranges from 55% to 65%, with most deals landing at 60% or below. DSCR requirements of 1.25-1.35x are at the higher end of CRE lending. If your property appraises at $5M, a life co will lend $3M-$3.25M — a bank might go to $3.75M. The conservative leverage isn't a constraint for borrowers with substantial equity, but for those needing maximum proceeds, supplemental capital (mezzanine or preferred equity) may be required.
Property Standards: Class A in Strong Markets
Life companies are the most selective lenders in CRE. The ideal deal: a Class A or strong Class B multifamily, industrial, anchored retail, or office property with 90%+ occupancy, credit-worthy tenants, well-maintained condition, in a primary metro area. Properties with deferred maintenance, tenant rollover concentration, below-market occupancy, tertiary locations, or unusual use types are declined outright. Specialty properties (self-storage, hospitality, medical office, car washes) are typically ineligible.
When Life Co Financing Is — and Isn't — the Right Answer
Choose a life company when: the property is stabilized Class A/B, you need 60% LTV or less, you plan to hold for the full loan term (no early exit), and you have 90+ days to close. Don't choose a life company when: you need higher leverage, may sell or refinance within the term (yield maintenance/defeasance are extremely expensive), the property is transitional or specialty, or you need to close in under 60 days. The lowest rate isn't always the lowest total cost of capital.
Licensed in Oregon & California · NMLS #1498678
From the Blog
Further Reading
CommercialLife Company Loans for Commercial Refinance: The Gold Standard That Isn't Right for Everyone
Life company loans offer the lowest fixed rates in commercial real estate — often beating banks, CMBS, and credit unions by 20-50 basis points. But ultra-conservative leverage, strict prepayment penalties, and highly selective underwriting mean they're a perfect fit for some deals and completely wrong for others. Here's how to know whether a life co refinance belongs in your capital stack.
CommercialNo Prepayment Penalty: Why Smart Commercial Borrowers Are Positioning for a Declining-Rate Environment
Yield maintenance, defeasance, and step-down penalties can cost hundreds of thousands of dollars when you refinance a commercial loan early. In a declining-rate environment, borrowers locked into penalty-heavy structures are watching cheaper capital pass them by. Here’s how no-prepayment-penalty commercial loans let you capture every basis point of savings when rates fall.
CommercialCommercial Cash-Out Refinance: How Savvy Investors Tap Equity to Renovate, Rehab, and Expand Their Portfolios
Your commercial property has probably appreciated more than you think — and a cash-out refinance lets you put that equity to work without selling the asset. Here's how smart investors use low-cost, already-owned equity to fund renovations, rehab value-add properties, and grow their CRE portfolios in 2026.