2 to 10 units
Multifamily DSCR loans for duplexes through ten-unit buildings
TL;DR
DSCR loans work on duplexes, triplexes, fourplexes and small apartment buildings up to about ten units. All the unit rents count toward the coverage test, which often makes small multifamily easier to qualify than a single-family house at the same price. Five units and up is treated as commercial by many lenders, so the menu changes, and I shop both sides.
Why small multifamily often pencils better
A fourplex at a given price usually produces more total rent than a single-family house at the same price, while the tax and insurance bills do not quadruple. More rent over a similar payment means a stronger ratio. That is not a promise for any specific building, but it is why so many investors move from houses to small multifamily after their first few deals.
Fourplex example
Unit rents: $1,150 + $1,150 + $1,050 + $1,050 = $4,400
P&I (as quoted) ........................ $2,700
Taxes + insurance ...................... $720
PITIA .................................. $3,420
DSCR = 4,400 / 3,420 = 1.29
Two to four units vs five to ten units
Two-to-four unit properties are still residential in the eyes of most wholesale lenders. They are appraised with residential forms and underwritten much like a single-family DSCR loan.
At five units and up, many lenders switch to small-balance commercial guidelines. Expect a commercial-style appraisal, a closer look at the rent roll and operating history, and sometimes different terms and prepayment structures. Not every DSCR lender does five-plus, which is exactly why it pays to have the file shopped.
What I need on a multifamily file
- A current rent roll: unit, tenant status, lease rent, lease end date.
- Copies of the leases (or a plan for vacant units).
- For five units and up, a trailing operating statement if one exists.
- Insurance quote covering the full building.
- Notes on deferred maintenance or units that are offline.
Mixed-use buildings
A storefront with apartments above can sometimes fit a DSCR program, based on the commercial share of the building and the lender. Send me the details and I will tell you honestly whether it belongs in this product.
Questions investors ask me about this
Can I get a DSCR loan on a fourplex?
Yes. Two-to-four unit rentals are a standard DSCR property type with many wholesale lenders, and the rent from every unit counts toward the ratio.
Do DSCR loans work on a five-unit building?
Often, yes, but many lenders treat five to ten units as small-balance commercial with different appraisal and underwriting requirements. Fewer lenders offer it, so shopping matters.
Can I live in one unit of a duplex with a DSCR loan?
No. Loans arranged through this site are business-purpose, non-owner-occupied only. If you will live in any unit, this is not the right product.
Want me to run your numbers?
Send me the property, the rent and what you are trying to do. I will run the coverage math, tell you where it stands, and shop it with wholesale lenders if it makes sense.