How do I refinance my small apartment building when the balloon is due?
Short answer: Start 18 to 24 months before the balloon date, and have the deal in front of lenders by 12 months out. Get a current value and a clean rent roll, work out what loan the building's income supports at today's terms, and shop that deal across banks, agency small-loan programs and bridge lenders at the same time. If the new loan won't fully pay off the old one, find out early so you can plan a pay-down, an extension or a sale on your terms instead of the lender's.
I'm Dominick Prevete, founder of Blue Sky Capital Advisors. My background: 31+ years in real estate finance, including regional leadership of a business generating over $2 billion in annual sales volume, and 100+ bank and institutional lender relationships. Here is the plan I walk owners through.
Why 2026 balloons are harder than the last round
- A large wave is coming due. MMG Real Estate Advisors projects 2026 multifamily loan maturities at about $162.1 billion, with more due in 2027. Blue Sky's maturity-wall analysis walks through what that wave means for a small-balance owner.
- Many of these loans were written in 2021 and 2022, when financing cost far less and underwriting was looser.
- The new loan is sized on today's income at today's terms. The same rent roll now supports a smaller loan. In the worked example in that analysis, the same income supports roughly a quarter less loan than it did at origination. That shortfall is the proceeds gap, and it is why balloon refinances fail even on buildings that are full and paying on time.
- Agency programs don't close the gap on their own. They size loans with the same coverage math that creates it, so the shortfall shows up as cash the owner has to bring to closing.
The fix is time: time to raise income, time to find the lender that sizes your building best, and time to choose between a pay-down, a bridge loan or a sale before the date forces the choice.
Which banks are refinancing apartment buildings right now (New Jersey)
From Blue Sky's NJ Bank CRE Lending Tracker, built from FFIEC Call Reports as of June 30, 2026:
- New Jersey's 50 chartered banks hold $79.0 billion of commercial real estate loans, $31.2 billion of it multifamily.
- In the year to June 30, 2026, ten of the 35 banks with CRE books above $50 million shrank their CRE books and eleven grew theirs by 10% or more.
- 17 of those 35 banks are at or above the 300% concentration level in the federal regulators' 2006 CRE guidance, the level at which examiners expect heightened risk management. Those 17 hold 92% of the CRE on New Jersey bank balance sheets.
Being at or above that level is a monitoring criterion, not a violation, a cap or a finding about any bank's condition. The tracker names every bank, with its CRE book, its concentration ratio and its growth; Call Report figures are filing facts, not a ranking or recommendation of any bank.
What this means for you: if your current bank is one of the ones pulling back, a tough renewal or a “no” may say more about the bank's balance sheet than about your building. The banks growing their books are the first calls to make. Methodology · National bank CRE data for other states.
The balloon refinance timeline
18 to 24 months out: know where you stand
- Find your loan documents. Note the maturity date, any prepayment penalty or open window, and whether there is an extension option.
- Pull your last two years of operating statements and a current rent roll.
- Check whether today's income covers your payoff. Run the building through the multifamily loan sizer and compare the result to your balance.
- If it comes up short, you have time to fix it: raise rents at renewal, fill vacancies, cut expenses that don't need to be there.
12 months out: build the package and start shopping
- Clean up the financials. Lenders underwrite what they can verify.
- Plan for an appraisal, and expect lenders to want their own.
- Ask your current lender whether it wants to renew, and on what terms. Get it in writing if you can.
- Get the deal in front of multiple lenders, starting with banks that are growing their CRE books.
6 months out: pick a path and sign a term sheet
- Compare lender term sheets side by side: loan amount, recourse, prepayment, reserves and timing, not just the headline number.
- Sign the one you want and start underwriting. Appraisal, environmental and title work all take time.
- If no option fully pays off the balloon, decide now: bring cash to closing, ask for an extension, take a bridge loan, or sell.
3 months out: close
- Respond to lender conditions fast. Most delays at this stage are missing documents.
- Confirm the payoff letter from your current lender.
- If closing will slip past the maturity date, ask your current lender for a short extension before the date, not after.
Your options, and when each one fits
| Option | When it fits |
|---|---|
| Bank or portfolio refinance | Stable building, decent occupancy, owner with a solid track record. Local and regional banks that are growing their CRE books often want the relationship, including your deposits. |
| Agency small-loan program (Fannie Mae Small Mortgage Loan, or Freddie Mac Conventional Small) | Well-run, stabilized multifamily where you want a longer fixed term and can meet stricter property and borrower standards. Freddie Mac Conventional Small covers loans of $2M–$10M, so the smallest buildings usually fit a bank better. |
| Bridge loan | The building isn't stabilized yet (vacancy, deferred maintenance, rents below market) and needs 12 to 36 months before a permanent lender will size it properly. |
| Extension or modification with your current lender | The loan is performing, you are close on a refinance, or the property needs a little more time. Ask early. It is a negotiation, not a right, unless your documents give you an option. |
| Sale | The numbers don't support a new loan, you don't want to put in more cash, or it is time to exit. Selling before maturity keeps you in control of price and timing. |
Why balloon refinances fail
- The income doesn't support the payoff. This is the proceeds gap described above.
- Starting too late. Appraisals, environmentals and lender committees take weeks. Starting 60 days out leaves no room for a single problem.
- Messy financials. Rent rolls that don't match deposits, missing leases, or expenses that can't be documented.
- Deferred maintenance. Inspections and appraisals pick it up, and lenders may hold back proceeds or decline.
- Only asking one lender. If your current bank says no, that is one bank's answer, and it may be a bank that is shrinking its CRE book.
- Borrower issues. Credit events, liquidity, or other loans in trouble can stop a deal even when the building is fine.
More on this: Why was my apartment loan declined?
Documents to gather
- Current loan documents and a recent mortgage statement
- Rent roll (current, with lease dates and amounts)
- Operating statements for the last 2 years plus year to date
- Copies of leases
- Recent tax bills, insurance policy and utility costs
- List of capital improvements with dates and costs
- Entity documents (operating agreement, articles) for the borrowing LLC
- Personal financial statement and schedule of real estate owned for each guarantor
- Photos and any prior appraisal or inspection reports
Example scenario (illustrative only)
This is a made-up example to show how the process works. It is not a real client, and the numbers are round for clarity.
An owner has a 10 unit building in northern New Jersey with a balloon due in 18 months. Two units are vacant and rents on the rest are below market. When she runs the building through a loan sizer on current income, a new permanent loan comes up short of her payoff.
Because she started early, she has options. She leases the two vacant units and renews three tenants at higher rents over the next six months, and the building's income now supports a larger loan. She takes the deal to a local bank that is growing its CRE book and to an agency lender, picks the bank because it offers the prepayment terms she wants, and closes a month before maturity. Had the numbers still come up short, her fallback was a bridge loan to finish the lease-up, then a permanent refinance.
How Blue Sky helps
Blue Sky Capital Advisors is a commercial mortgage advisor, not a lender. Blue Sky arranges, structures and places the financing: I take your building to the lenders most likely to say yes, across banks, credit unions, agency programs and private capital, and bring their term sheets back so you can compare them side by side.
- I look at your deal early and tell you honestly whether the refinance pencils, and what to fix if it doesn't.
- I use Blue Sky's own NJ and national bank CRE lending data to target banks that are actively growing their books.
- I handle the package, the lender conversations and the timeline so you aren't chasing it alone.
- Here is how we get paid.
Within 24 hours, Dominick sizes up your deal — which lenders fit, how he'd structure it, and what it takes to close.
Balloon coming up?
- Talk to me directly: call (908) 220-6404 or email dominick@blueskycapitaladvisors.com.
- Send me your deal: Send Dominick your deal.
What owners ask
How early should I start refinancing a balloon loan?
Why can't I refinance for the same amount I owe?
Which banks are refinancing apartment buildings in New Jersey?
What happens if I can't refinance before the balloon is due?
Will my current bank just renew the loan?
What if the new loan won't cover my payoff?
Is a bridge loan a good idea for a balloon refinance?
Can I refinance a small apartment building without tax returns?
Should I sell instead of refinancing?
Does Blue Sky Capital Advisors lend the money?
Further reading
- The maturity wall for the $1M to $5M owner: the proceeds gap on the same building, and the ways owners fill it.
- Sizing a matured balloon takeout: which test binds, and the four paths out of a gap.
- Past maturity, still paying: what the CMBS data says about loans that matured and kept paying.
- Multifamily financing: how apartment deals are structured, placed and closed.
- Bridge loans: when a building needs time before a permanent lender will size it.