Low debt-service coverage ratios raise potential for default or refinancing barriers
SANTA BARBARA, Calif., Nov. 4, 2026 – While most market-rate loans for U.S. multifamily properties boast strong credit metrics, a significant portion of them exhibit weaknesses that could increase the risk of default, a new bulletin from Yardi® Matrix reports.
Multifamily loans valued at almost $250 billion are coming due through 2028, with market-rate properties accounting for about $230 billion of the total and the remainder backed by fully affordable properties.
About 8% of the loans in the Yardi Matrix database, which tracks $1.4 trillion of multifamily debt, have debt-service coverage ratios, or DSCRs, equal or less than 0.6, along with high loan-to-value ratios.
A DSCR less than 1.0 means that net income is less than the property’s mortgage payments. This measurement means that “properties that borrowed when rates were lower may not generate enough income to refinance the full balance of their existing loans at today’s higher rate,” the Yardi Matrix bulletin notes. That possibility may force borrowers to contribute additional equity, negotiate an extension or obtain supplemental financing.
Potential distress is concentrated in floating-rate loans originated from 2020 through 2022. More than a quarter of the $52.5 billion in outstanding variable-rate loans originated over that period are tied to properties with current estimated DSCRs of 0.8 or less.
Get more analysis of upcoming maturing multifamily debt in the October 2026 Yardi Matrix bulletin, “Minority of Problem Loans Lurk in Maturing Multifamily Debt.”
Yardi Matrix offers the industry’s most comprehensive market intelligence tool for investment professionals, equity investors, lenders and property managers who underwrite and manage investments in commercial real estate. Yardi Matrix covers multifamily, single-family rentals/ build to rent, affordable housing, student housing, self storage, office, industrial, retail and vacant land property types. Email [email protected], call (480) 663-1149 or visit yardimatrix.com to learn more.
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