Financing a 5-9 unit multifamily building
Which lenders finance a small apartment building of 5 to 9 units?
Five units is the line: below it, a property is residential and appraised on comparable sales; at five and above, it is commercial multi-family, appraised on income, and only a subset of this directory’s lenders write it at all.
- Multi-family loan Five or more units is commercial multi-family by definition, underwritten on income capitalization rather than comparable single-family sales.
- Standard single-family DSCR loan A five-unit-and-up building does not qualify under a 1-4 unit residential DSCR program at all — it needs a lender that explicitly writes multi-family.
Lenders in the directory
No lender here publishes a rule for this
This is an underwriting judgment, not a published threshold. None of the 37 lenders in the directory states a policy on it, so there is no honest way to build a shortlist — and a list computed only from which products a lender writes would tell you nothing you could act on.
What matters here is how the file is presented rather than which lender receives it. The sections below cover that. When you are ready to approach lenders, the directory shows what each one does publish, with the date it was verified.
Why the line falls at five units
Both agency guidelines and the non-QM lenders in this directory follow the same convention: 1-4 units is residential, 5+ is commercial multi-family. Crossing that line changes the appraisal approach from comparable sales to income capitalization, changes the loan documents from residential to commercial forms, and narrows the pool of lenders willing to underwrite the deal at all — only three lenders in this directory carry a multi-family product tag.
What income-based appraisal means in practice
An income approach appraisal builds value from the building’s net operating income and a capitalization rate pulled from comparable multi-family sales, rather than from a handful of similar houses that sold nearby. That means a full trailing operating statement — Form 216 — carries real weight in the file, in a way it never does on a single-family purchase.
The roster here is genuinely smaller
This is one of the few property-type pages in this cluster where the lender list actually changes because of the property, not just the framing. Filtering to lenders who carry a multi-family product tag cuts the pool from the roughly three dozen lenders who write single-family rental financing down to a small handful — see the roster below for exactly which ones and what they have (or have not) published.
What to have ready
- Trailing twelve months of operating statements (Form 216 or equivalent)
- Current rent roll with lease terms for every unit
- Capital expenditure history — roof, mechanicals, unit turns
Questions
Is a five-unit building financed differently from a fourplex?
Do I need a full operating statement to apply?
How is this different from the 10+ unit page?
Terms used on this page
- Net Operating Income (NOI) — Net operating income is a property’s annual income minus its operating expenses, calculated before any mortgage payment. It measures what the property earns, independent of how it was financed.
- Form 216 (Operating Income Statement) — Form 216, the Operating Income Statement, is an appraisal form used alongside a small residential income property appraisal to develop the estimated income and expenses that support an income-approach opinion of value.
- Capitalization Rate (Cap Rate) — A cap rate is a property’s annual net operating income divided by its price or value, expressed as a percentage. It is the unlevered yield the property produces at that price.