How it works
Underwriting is driven by the rent roll and operating statements rather than your personal income. Agency execution through Fannie and Freddie small balance programs offers the best pricing on stabilized properties; bridge debt covers anything needing repositioning before it can qualify.
A 12-unit building has stabilized rents and expenses. The lender will build an NOI, apply a vacancy/expense view, size the loan to DSCR and LTV, and then look at borrower experience, reserves and the local multifamily market.
Who it can work well for
Investors moving up from 1-4 unit rentals, and owners of mixed-use buildings with apartments above ground-floor retail.
What lenders actually look at
Key items include rent roll, leases, trailing operating statements, taxes/insurance, repairs, vacancy, NOI, DSCR, unit condition, market rents, borrower liquidity and experience.
Illustrative lender guidelines
These are educational examples, not universal approval rules. Exact requirements and maximum leverage vary by lender and complete scenario.
| Scenario | Credit / qualifier | Illustrative leverage |
|---|---|---|
| Stabilized multifamily 5+ | 680+ | 75-80% |
| Mixed use, stabilized | 680+ | 70-75% |
| Bridge / reposition | 680+ | 70% LTC |
| Commercial sq ft cap | — | 25-40% typical |
| Minimum DSCR | — | 1.20-1.25 |
What to watch for
Most lenders cap the commercial portion of a mixed-use building at 25% to 40% of square footage or income. Exceed it and the property is underwritten as pure commercial at lower leverage.
Common misconception: financing a 5+ unit building is simply a residential loan with more units. Once the property crosses into commercial multifamily, valuation and underwriting are driven much more heavily by income.
When this may not be the best choice
Commercial multifamily financing may not be ideal for a 2–4 unit property that qualifies under residential rules or a major renovation project that needs bridge/construction financing first.
Common questions
Related programs
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