Multifamily properties can be townhomes, duplexes, small apartment buildings, or even apartment complexes and high rises. If the building has four household units or less, the property is classified as residential, and any property built to accommodate over four households is considered commercial.

In the US, there were 402,000 multifamily housing units registered in 2019, the highest number for two decades. 

Why are they so popular, you might ask. Well, multifamily housing generates higher rental income than single-family homes, which makes the return on investment much greater than other forms of real estate in the long run. A multifamily property also provides a more efficient way to manage your risk.

For example, if you have a 3 family rental property and 1 unit is vacant, you will still have 2 tenant-occupied units paying rent to cover monthly costs. If you have a single family property that remains vacant for 1 or more months, you’ll have to bear all the carrying costs on your own until you find your qualified tenant.

The big question always, however, is how to finance one of these properties, and unless your financial circumstances are exceptional, you are most likely to need a loan. If this is the case for you, we’re here to help.

We’re going to explain the different types of multifamily housing that exist, how to get a loan for a multifamily property, and what loan rates to expect. 

What is a Multifamily Loan?

When it comes to financing your multifamily property, there are a wide range of loans to choose from to help you make your next big investment. 

First, you should ask yourself how long you’re going to need to pay off your loan. Short term loans can range from 6 to 12 months, and long term ones can have amortization periods of between 5 to 35 years. 

Depending on what sort of multifamily property you are looking to buy, your status as an investor, and how quickly you are looking to pay the loan back, there are four main financing options available:

  • Government-funded loans – These are funded by the US Department of Housing and Urban Development (HUD), or the Federal Housing Association (FHA), and offer loans to investors looking to acquire multifamily housing with up to four units.
  • Conventional mortgages – If you would like a longer amortization period, a conventional mortgage is a good option for anyone looking to pay their loan back over 15 to 30 years. Loan limits for these mortgages vary according to each bank.
  • Portfolio loans – If you’re looking to invest in multiple properties at once, portfolio loans give you the flexibility to finance between four to 10 multifamily properties, all at the same time. 
  • Commercial private money loans – Private money loans are a great short-term option for those looking to invest in residential multifamily properties, with previous investor or renovation experience.

If you’re looking to invest in residential multifamily properties get in touch with us today.

How to Qualify for a Multifamily Loan?

If you’re wondering how to get approved for a multifamily loan, the answer varies according to which kind of loan you are applying for.

However, the common denominators between the four of them include a fair credit score and some sort of down payment. 


The first requirement for a government-funded loan is to work with an underwriter licensed by the FHA, which commercial mortgage brokers can help you organize.

Your personal finances will also be analyzed to make sure that you don’t have any outstanding debt and that your name is not on the Credit Alert Interactive Reporting System (CAIVRS). According to the number of units the property you’re investing in has, you’ll need to show evidence of tax returns, payslips, W-2s, and possibly your financial reserves. 

Down payments can range between 3.5% to 10%, depending on your credit score. 

Conventional Mortgage 

To apply for a conventional mortgage, you’ll need a high credit score — minimum 680.

Banks will also check that your Debt Service Coverage Ratio (DSCR) — your net operating income divided by total debt service — is over 1.25, and you may be required to show evidence of between 6 to 12 months of cash reserves, tax returns, and rent payments.

Portfolio Loans

In order to apply for a portfolio loan, investors will need to show evidence of their stakes in other multifamily properties.

For portfolio lenders, the investors’ personal finances are less important — with most requiring a minimum credit score of 600, a DSCR of over 1.25, and cash reserves of up to six months. 

Private Money Loans

Finally, when it comes to private money loans, your previous property experience really matters, especially when it comes to multifamily– whether that be in investment or renovation.

Of course, having a good credit score of 640 or above and a DSCR of over 1.05 helps as well. Usually, a down payment of 10% as a minimum is also required.

What are Standard Commercial Multifamily Loan Rates?

In general, commercial loan rates for multifamily properties tend to be slightly higher than standard, single-family mortgage rates.

Government-Funded Loans

HUD/FHA multifamily property loan rates are capped at 3.05% if the building is standard, and 2.76% if the building is green construction.

Amortization periods can last up to 35 years, and for a rate of 0.50%, future homeowners can assume the loan. The good news is that these loans are non-recourse at up to 80% of the loan value. This means that if you find yourself unable to repay the loan at any point, it’s against the law for the government to repossess your personal assets. 

Conventional Mortgage 

For a conventional mortgage, interest rates can either be set at a fixed rate or vary throughout the amortization period, which can be up to 30 years if it’s fixed.

By taking out a loan from the bank, its rates will be capped at the live rate set by the Intercontinental Exchange London Interbank Offered Rate (LIBOR), on top of a proportional 5% to 6%.

Portfolio Loans 

Portfolio lenders set their interest rates based on their investor’s risk requirements. This means they can be higher than government-backed funding options or bank balance loans, at between 5 and 6%.

Private Money Loans 

Private money lenders offering private money loans typical charge interest rates of between 8% and 12%. This type of financing is easier and quicker to access than the above options. It’s usually used as a short term financing solution, before either refinancing or reselling the property.

Here at We Lend, our rates start at 7.99%, no bank statements or tax returns are required, we fund deals within 14 days, and offer flexible terms, too!

For first time investors or for those looking to make a cool profit as soon as possible, private money loans are a great option.

So, if you feel like you now know how to get a loan for a multifamily property, and a private money loan sounds like the right one for you, then what are you waiting for? Apply today!