Multi-Family Loans (5+ Units)
"Scale your apartment portfolio."
Commercial financing for apartment buildings with 5+ units. Qualify using property income with DSCR and cap rate analysis.
20-25%
Min Down
680+
Min Credit
$10M+
Max Loan
Multi-Family Loans (5+ Units) Benefits
Everything you need to know about your benefits
Scale Beyond 4 Units
Graduate from residential investing to commercial-scale apartment buildings
Property Income Qualifies
Underwriting focuses on NOI and DSCR, not your personal tax returns
Economies of Scale
Lower per-unit costs for management, maintenance, and vacancy
Portfolio Growth
Build significant real estate holdings with commercial financing
Entity Protection
Hold in LLC or LP for liability protection and tax advantages
Forced Appreciation
Increase NOI through improvements and rent growth to boost property value
How It Works
Your path to homeownership in just a few simple steps
Identify the Property
Find a stabilized multi-family property with 5+ units, strong occupancy, and documented income.
Analyze Performance
Calculate NOI, DSCR, and cap rate to verify the property meets lending requirements.
Submit Property Package
Provide T-12 financials, rent roll, leases, and borrower financial statements.
Commercial Underwriting
Lender reviews property performance, tenant quality, market conditions, and borrower experience.
Identify the Property
Find a stabilized multi-family property with 5+ units, strong occupancy, and documented income.
Analyze Performance
Calculate NOI, DSCR, and cap rate to verify the property meets lending requirements.
Submit Property Package
Provide T-12 financials, rent roll, leases, and borrower financial statements.
Commercial Underwriting
Lender reviews property performance, tenant quality, market conditions, and borrower experience.
Close and Operate
Complete acquisition and manage your apartment investment for long-term cash flow.
Understanding Cap Rate
How investors evaluate multi-family property value and returns
The Formula
Cap Rate = Net Operating Income (NOI) ÷ Purchase Price
Example Calculation:
Net Operating Income
$150,000
Purchase Price
$2,000,000
Cap Rate Result
7.5%
What Cap Rate Tells You
Cap rate measures the relationship between a property income and its purchase price. For multi-family, higher cap rates indicate higher potential returns but often come with older properties or less desirable locations.
Higher Cap Rate (7%+)
Higher potential returns, but often indicates older properties, less desirable locations, or higher vacancy risk.
Lower Cap Rate (4-6%)
Lower immediate returns, but typically premium locations, newer properties, and more stable income.
Important: Cap rate alone doesn't determine a good investment. Always consider location, tenant quality, property condition, and market trends.
Market Cap Rates by Property Type
Typical ranges vary by property class and location (2024 averages)
Class A Multi-Family
Cap Rate Range
4.0% – 5.5%
Class B Multi-Family
Cap Rate Range
5.5% – 7.0%
Class C Multi-Family
Cap Rate Range
7.0% – 9.0%
Student Housing
Cap Rate Range
5.5% – 7.5%
Senior Housing
Cap Rate Range
6.0% – 8.0%
Garden Apartments
Cap Rate Range
5.0% – 6.5%
* Cap rates vary significantly by market, property condition, and economic conditions. These are national averages for reference only.
Loan Details
Documentation Required
- Property financials (T-12, P&L statements)
- Current rent roll with lease terms
- 2-3 years property tax returns
- Borrower personal financial statement
- Entity documents (operating agreement)
- Commercial property appraisal
Eligible Property Types
- Apartment buildings (5-50+ units)
- Garden-style apartments
- Mid-rise apartment complexes
- Mixed-use with residential majority
- Student housing
- Senior housing / assisted living
Additional Info
- Minimum DSCR typically 1.20-1.25
- Cap rate analysis for valuation
- 90%+ occupancy preferred
- Entity ownership required
- Environmental review may be required
Multi-Family vs. Residential Investment
| Feature | Multi-Family (5+)(This loan) | Residential (1-4) |
|---|---|---|
| Qualification Focus | Property NOI & DSCR | Borrower income (DTI) |
| Loan Terms | 5-10 year with balloon | 30-year fixed available |
| Down Payment | 20-25% | 15-25% |
| Amortization | 25-30 years | 30 years fully amortizing |
| Entity Ownership | Required (LLC, LP) | Optional |
| Appraisal Method | Income approach (cap rate) | Comparable sales |
| Property Limits | Unlimited | Max 10 financed properties |
| Rate Structure | Often adjustable | Fixed or ARM options |
* Rates and terms subject to change. Contact us for current offers.
Frequently Asked Questions
Common questions about Multi-Family Loans (5+ Units)
Last updated:
What is the difference between multi-family and residential investment loans?
Multi-family loans (5+ units) use commercial underwriting focused on property income (NOI, DSCR, cap rate), while residential investment loans (1-4 units) focus on borrower income. Multi-family has shorter terms (5-10 years vs 30) but allows unlimited properties and entity ownership.
What DSCR is required for multi-family loans?
Most lenders require 1.20-1.25 DSCR, meaning property NOI must be 120-125% of annual debt service. Stronger DSCR (1.30+) may qualify for better rates. Properties below 1.20 may need value-add improvements or additional collateral.
How is cap rate used in multi-family lending?
Cap rate (NOI divided by purchase price) helps determine property value and investment return. Lenders use cap rates to verify purchase price is reasonable for the market. Lower cap rates indicate lower risk but also lower returns relative to price.
- Commercial multi-family loans typically have 5-10 year terms with 25-30 year amortization, resulting in a balloon payment. This allows lenders to reprice the loan periodically and requires refinancing at term end. Some lenders offer longer terms at higher rates.
- Most lenders prefer 90%+ stabilized occupancy with established tenants on leases. Properties in lease-up or with high vacancy may need bridge financing first, then permanent financing once stabilized.
- Properties needing significant renovation or lease-up typically require bridge loans first. Once stabilized with improved NOI and occupancy, you can refinance into permanent multi-family financing at better terms.
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Ready to Scale Your Portfolio?
Finance apartment buildings with property income qualification
Or call us directly: (757) 558-2603