5 to 8 unit DSCR loans

Small apartment buildings, qualified on the rent roll.

In a nutshell

Depending on the lender, DSCR programs finance 5 to 8 unit residential buildings, commonly up to about 75% loan-to-value on a purchase with loans to $2 million or $3 million. Lenders usually want an experienced investor, a ratio near 1.0 or better, and a credit score around 680 or 700.

Why a separate category

One-to-four unit properties are treated as residential by depending on the program, lenders. At five units and above, many loans move to commercial underwriting. DSCR programs in this range sit between the two. They apply the same rent-over-payment test but with tighter limits because the property is larger and more operational.

Typical guardrails

Item	General expectation where lender guidelines allow it
Leverage	About 75% on purchase and rate-and-term, around 65% on cash-out
Loan size	Up to $2 million or $3 million
Experience	At least one experienced investor on the loan
Credit	About 680 to 700 and up
Unit size	Depending on the lender, programs set a minimum square footage per unit
Interest-only	Available where lender guidelines allow it and may be used to qualify
Vacancy	Depending on the lender, programs tolerate a limited number of vacant units

Underwriting the building

With five to eight units, rent comes from a rent roll and leases, and the appraiser documents market rent for each unit. Operating costs such as repairs, management and vacancy are not part of the formula, but a lender may look at them as a sanity check, and you should model them seriously.

Before you start

Gather the rent roll and leases
Get insurance quotes for the entire building
Confirm the building's zoning and unit count are legal
Plan reserves, since they are usually larger for this size

Smaller buildings are covered in the programs overview.

Frequently asked questions

What about a small apartment building?

Depending on the lender, programs finance buildings with five to eight residential units, commonly to about 75% loan-to-value, and they usually expect an experienced investor on the loan. See 5 to 8 unit loans.

How many months of reserves will a lender ask for?

Reserves are the liquid funds still in your accounts after closing, measured in months of PITIA. The range runs from none where lender guidelines allow it to about six months, and goes higher for first-time investors, foreign nationals, large loans and low ratios. Where lender guidelines allow it, cash-out proceeds can count toward the requirement.

How many rentals can I finance?

Depending on the lender, programs do not set a property count the way conventional rules do. A lender can still cap its own exposure to you or ask for more reserves as the portfolio grows, so we line up a program that fits your plan.