Permanent Loan
A permanent loan is long-term commercial mortgage financing on a stabilized, income-producing property — typically a 5 to 10-year term with 25 to 30-year amortization, priced at a fixed or floating rate tied to Treasuries, swaps, or SOFR. Banks, life insurance companies, CMBS conduits, and agency lenders are the primary sources.
Unlike bridge or construction loans, permanent lenders underwrite current, in-place NOI rather than a projected business plan or future value — which is why most properties typically need to first reach stabilization before qualifying for permanent financing on competitive, market-rate terms.
Permanent loans are the typical takeout for a bridge or construction loan: once a property stabilizes, the sponsor refinances the short-term debt into a permanent loan at a lower rate and longer term, closing out the transition financing that got the property there.