How Multifamily Deals Are Actually Financed, According to Shravan Parsi

Lenders are expected to close $805.5 billion in commercial and multifamily mortgages in 2026, a 27% increase over 2025, with multifamily alone accounting for $399.2 billion, according to the Mortgage Bankers Association. Another $875 billion in existing loans, or 17% of all outstanding commercial mortgage debt, matures before the year ends, and money at that scale moves through a structure most people outside the industry never see.

Shravan Parsi, founder and CEO of Austin-based American Ventures, drew a plain-English map of that structure in a June 2021 Forbes article describing multifamily as "a 3-trillion-dollar industry" that accounts for roughly 14% of GDP. Five years, one historic rate cycle, and one supply wave later, the map needs an update, and Parsi, who spent his first career as a pharmaceutical scientist and has since invested in roughly 4,400 multifamily units and multiple commercial properties, has watched the revisions from inside them.

"Capital has choices again," Parsi said in a November 2025 statement. "To be selected in this market, a sponsor must demonstrate why their approach makes sense now and not rely on the old narrative that everything in Texas will go up forever."

The Capital Stack, Layer by Layer

Every multifamily acquisition is financed through a stack of capital in which position determines both risk and reward, and Parsi's 2021 example still works as the teaching case: a $10 million apartment complex in suburban Dallas, where lenders put up $6.5 million against the property and the remaining $3.5 million comes from equity. JPMorganChase's commercial banking guide sorts the layers by payment priority:

• Senior debt, the mortgage itself, is repaid first and priced lowest because the property serves as collateral; most multifamily senior debt is non-recourse, meaning the asset rather than the borrower's personal balance sheet secures it
• Mezzanine debt sits behind the mortgage, and its lenders can typically take the borrower's equity in a default, though not the property itself
• Preferred equity holds an ownership stake that collects a fixed priority return, but only after every debt obligation is paid
• Common equity takes the most risk, gets paid last, and keeps the upside when the deal performs

Sponsors fill the equity layers by pooling investors into a single-purpose entity. "This is called syndicating a deal and is a typical way to create a real estate investment opportunity," Parsi wrote in the 2021 piece.

"The stack itself has not changed. Senior debt still gets paid first, and common equity still gets paid last," Parsi said. "What changed is that every layer now asks harder questions of the layer below it."

The Government-Backed Backbone Still Holds

Multifamily differs from every other commercial asset class in who stands behind the senior debt. "Fannie Mae and Freddie Mac buy mortgages from commercial lenders and other financial institutions and guarantee that the principal and interest on those mortgages will be paid," Parsi wrote in 2021. That backbone came through the downturn intact: the two agencies produced a combined $151.6 billion in multifamily volume in 2025, up 25% year over year, and their federal regulator raised the 2026 purchase caps to $88 billion each, a 20.5% increase, with workforce housing loans exempt from the caps entirely.

Agency debt also explains how the asset class scales, since loans are non-recourse and each property covers its own debt service, which lets a sponsor finance several properties in parallel instead of pledging personal assets against each one.

What Broke Between 2021 and 2026

When Parsi's article ran in June 2021, the federal funds target sat at 0 to 0.25% and the 10-year Treasury yielded about 1.5%. As of early August 2026, the effective federal funds rate is 3.63% and the 10-year yields 4.65%, per Federal Reserve data. Deals financed with two-year floating-rate bridge loans in 2021 and 2022 watched debt service climb past their rent rolls, and the workouts are still running: one large syndicator that raised $277 million from investors needed rescue preferred equity carrying a 15% priority return, on terms projected to wipe out as much as 88% of the original capital.

Parsi financed against the opposite risk, locking a 40-year HUD loan at a 2.96% fixed rate on the firm's Garland, Texas development in December 2021, months before the hiking cycle began.

"The cycle's biggest lesson was that the price of debt matters less than its duration," he said. "The industry gorged on cheap two-year bridge money and learned that a loan maturing at the wrong moment can kill a good property. Match your debt to your business plan's timeline, then add margin."

Where the Risk Sits in 2026

Roughly 13% of multifamily loan balances mature in 2026, and refinancing math is the pressure point. Multifamily CMBS delinquency ran between 6.85% and 7.47% in early 2026, with values roughly 28% below their 2022 peak, and Josh Bodin of Berkadia summarized the standoff for Multi-Housing News: "The maturity in multifamily is less about 'nobody wants the asset' and more about refinance math not penciling at today's rates."

"Real estate is a financed asset class, and debt is its weather," Parsi said. "A maturity date is a storm you have seen coming since the day you closed."

The lender mix has shifted beneath the workouts. Alternative lenders, including the debt funds that wrote much of the 2021 bridge paper, took 38% of non-agency loan closings by mid-2026, up from 34% a year earlier, even as average commercial mortgage rates eased to 5.7%. Flexible capital from that corner of the market is what burned borrowers last cycle, so its growing share reads as a benefit and a warning in the same statistic.

Construction lending registers the caution from the supply side. Multifamily starts fell to roughly 55,000 units in the first quarter of 2026, according to CoStar data, down 73% from the early-2022 peak and the lowest quarterly figure since 2011, largely because financing costs stopped new projects from working on paper.

What Capital Now Demands of a Deal

The structure Parsi described in 2021, an agency backbone under non-recourse senior debt and syndicated equity above it, survived the stress test, and what changed instead is the scrutiny applied at every layer, starting with the assumptions inside the sponsor's own model.

"In 2021, the market decided exit cap rates only compress. Every model I saw assumed you'd sell at a lower cap than you bought at. We kept stress testing expansion, exactly as the book prescribes, and it cost us deals at the time," Parsi said. "Discipline always looks like lost opportunity until the cycle turns. Then it looks like survival."

The forecasts describe a market getting bigger and warier at once, with originations projected to grow 20.8% this year while $875 billion in maturities forces refinancing conversations nobody scheduled. For the sponsors raising the equity layers, Parsi argues, the selection criteria have tightened for good.

"Momentum investing is over," he said. "Sponsors who combine disciplined underwriting, local market knowledge and a repeatable operating playbook will be the ones investors choose in this new market reality."