5-9 Unit DSCR Loans | Small Multifamily

DSCR Loans for 5-9 Unit Properties

Small multifamily financing that qualifies on the property's rental income, not your tax returns. Built for experienced investors buying or refinancing 5 to 9 unit residential buildings.

Most lenders treat 5+ unit buildings as commercial loans, with balance-sheet underwriting, short terms and balloon payments. A 5-9 unit DSCR loan works differently: the property qualifies on its own cash flow, you get a 30-year term, and you can close in your LLC. No W-2s, no tax returns, and no personal debt-to-income ratio.

If the building's gross rents cover the monthly payment (principal, interest, taxes, insurance and HOA) by at least 1.15x, you're on the right track.

5-9 Unit DSCR Program Highlights

The key numbers at a glance.

$350KMinimum Loan Amount

$2.5MMaximum Loan Amount

$500KMaximum Cash-Out

1.15Minimum DSCR

30 YrFixed & 5/6 ARM Terms

6 MoReserves (PITIA)

Loan Options

30-Year Fixed
30-Year Fixed Interest-Only
5/6 ARM
5/6 ARM Interest-Only
Purchase, Rate/Term Refinance & Cash-Out Refinance
Step-down prepayment penalty structures available

Who Qualifies

U.S. Citizens & Permanent Resident Aliens
LLCs (U.S. domestic) with a Personal Guarantor
Investors with at least 12 months of recent investment property ownership
24-month housing payment history
7 years seasoning from bankruptcy or foreclosure
Business-purpose investment properties only

How the DSCR Is Calculated

Your qualifying ratio comes straight from the building's rents.

DSCR = Gross Monthly Rent ÷ Monthly PITIAInterest-only loans use the interest-only payment (ITIA), including escrows.

Example: 6-Unit Building

6 units × $1,550 rent	$9,300
Principal & Interest	$6,250
Taxes, Insurance & HOA	$1,450
Monthly PITIA	$7,700
DSCR ($9,300 ÷ $7,700)	1.21 Qualifies

Hypothetical example for illustration only.

How Rents Are Counted

Uses the lower of the signed lease or market rent
Vacant units count at 75% of market rent
Long-term rentals only; short-term rental income is not allowed
ARMs qualify at the greater of the note rate or fully indexed rate
Rent-controlled areas: DSCR of 1.35+ and rules allowing at least 5% annual increases

Lease & Rental Requirements

Leases are the backbone of a 5-9 unit DSCR file.

Leased Units

Initial lease term of at least 12 months, between unrelated parties
Lease terms of 3 years or less, paid in U.S. dollars
Refinances: executed leases with 3+ months remaining on every unit
Month-to-month OK after a 12-month term, with 3 months of rent receipts
Rent roll accepted on purchases
Proof of security deposit required on new leases

Vacancies & Restrictions

Up to 2 vacant units allowed on purchase or refinance
Vacant units on a refinance need a recent lease within the last 2 months
No short-term, vacation or seasonal rentals
No room-by-room, SRO or boarder leases
No commercial use and no lease-purchase options
Owner, guarantors and family members can't occupy a unit

Property Requirements

5-9 unit residential buildings in average or better condition.

Every Unit Must

Have its own kitchen and bathroom
Have at least 500 sq. ft. of living area
Have bedrooms separate from the main living area
Be available for year-round residential use with permanent heat
Be free of health, safety and housing code violations
Be in average or better condition (no C5/C6)

Property & Appraisal

Maximum 2 acres; no rural properties
Full interior appraisal plus a third-party commercial BPO
Appraisals valid for 120 days; transferred appraisals allowed
Minor non-structural deferred maintenance up to $2,000 OK
5% LTV reduction in declining markets
Rent-loss insurance covering 6 months PITIA required

Ineligible Property Types

Single-family & 2-4 units
Mixed-use properties
Commercial or agricultural use
Condos, condotels & co-ops
Townhomes & rowhomes
Manufactured & modular homes
Boarding houses
Assisted living facilities
Log & unique homes
Rural properties & farms
Acreage over 2 acres
Vacant land

Transaction Details

What to expect on purchases, refinances and cash-out.

Purchase & Refinance

Purchase: LTV based on the lower of price or appraised value
Rate/Term: cash back up to the lesser of 2% or $2,000
Cash-Out: up to $500,000 for business purposes
Owned 6+ months: LTV uses the new appraised value
Owned under 6 months: lower of appraisal or purchase price plus documented improvements
Interest-only: 5% LTV reduction

Credit, Assets & Experience

Funds seasoned 60 days or sourced; no gift funds
6 months of PITIA reserves (cash-out proceeds can't be used)
Seller concessions up to 3%; no subordinate financing
Established credit: 3 tradelines for 12+ months, 2 for 24+ months, or 1 for 36+ months
Self-managing? 2 years of management experience, a certification, or a 700+ FICO
Up to 10 loans / $10M aggregate per borrower

Documents You'll Need

No tax returns or pay stubs. Here's a typical checklist.

Loan application for each guarantor
Photo ID
Credit report authorization
Articles of Organization
Operating Agreement
EIN letter or W-9
Certificate of Good Standing
Signed leases for all units
Rent receipts / rent roll
2 months of bank statements
Purchase contract (purchases)
Mortgage statements (refinances)
Hazard, flood & rent-loss insurance
Business Purpose Affidavit
Property management agreement (if any)

5-9 Unit DSCR Loan FAQs

Quick answers to the questions we hear most.

Can first-time investors get a 5-9 unit DSCR loan?

No. This program requires at least 12 months of investment property ownership within the most recent 12 months. If you're newer to investing, ask us about 1-4 unit DSCR options to build your track record.

What is the minimum DSCR for a 5-9 unit property?

1.15. That means gross rents must be at least 115% of the monthly PITIA. In rent-controlled areas the minimum rises to 1.35.

Can I close in my LLC?

Yes. Loans can close in a U.S. domestic LLC whose only business is owning and managing real estate. A personal guarantor who is a beneficial owner is required, and the entity can have up to 8 owners and 4 guarantors.

Can I use Airbnb or short-term rental income?

No. 5-9 unit DSCR loans are for long-term rentals with 12-month leases. Short-term, vacation and seasonal rentals aren't eligible. For STR properties, see our Short-Term Rental Loans page.

What if some of the units are vacant?

Up to 2 units can be vacant. Vacant units count at 75% of market rent in the DSCR calculation. On a refinance, each vacant unit needs evidence of a lease within the last two months.

Do I need tax returns or proof of income?

No. You qualify on the property's rental income. We'll review credit, assets, leases, and your entity documents, but no tax returns, W-2s or pay stubs.

How much cash-out can I take?

Up to $500,000 on a cash-out refinance, for business purposes. Rate/term refinances allow cash back up to the lesser of 2% of the loan or $2,000.

How much do I need in reserves?

Six months of PITIA on the subject property. Proceeds from the loan itself can't be counted toward reserves.

Ready to Finance Your Next 5-9 Unit Property?

Get a personalized DSCR rate quote and all of your questions answered by a small multifamily specialist.

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Program details are summarized for general information and are subject to change without notice. Not a commitment to lend. All loans are subject to credit approval, underwriting guidelines and property eligibility. Maximum LTV, minimum FICO and geographic availability vary by scenario.

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