For a stabilized apartment building with five or more units, many commercial lenders look for roughly 20% to 35% down, though the exact figure varies by lender, loan program, occupancy, and cash flow. Smaller owner-occupied buildings with two to four units follow residential rules and can need much less. Your required contribution depends on the loan structure and the transaction, so treat any number as a planning range rather than a promise. The sections below show what shapes your down payment, what lenders weigh besides cash, and how to prepare.
The typical down payment depends on the unit count, how you will use the property, and the loan program, so multifamily loan down payment requirements are not one number. Two paths cover most buyers.
If you plan to live in one unit of a two- to four-unit building, you can often use residential financing, and some programs allow a down payment far below what investors face. If you are buying an apartment building with five or more units, the loan is generally treated as commercial. Many lenders ask for roughly 20% to 35% of the purchase price in equity, and they may ask for more when a building is partly vacant or needs work.
Investors searching for loans for multifamily homes often see both sets of numbers mixed together, so check which category a figure applies to. For a 5+ unit building, the question is less “what percentage” and more “what mix of price, income, and condition does this lender accept?” A stronger, fully leased building can support more leverage, while a weaker one usually calls for more cash.
Your down payment is the flip side of loan-to-value (LTV). LTV is the loan amount divided by the property’s value, and equity is the part of the value you own outright.
If a lender caps LTV at 75%, you need at least 25% equity. On a $3,000,000 building, that means a loan of up to $2,250,000 and a down payment of at least $750,000, before closing costs and reserves. Lenders typically base the limit on the lower of the purchase price or the appraised value, so an appraisal that comes in under your price can increase the cash you bring.
Equity works differently when you already own the building. In a multifamily refinance loan, the equity you have built through paydown, higher rents, or improvements takes the place of a down payment. The new loan is sized against the current appraised value, which is why a cash-out refinance on an apartment building cannot pull out more than the lender’s LTV limit allows.
Plan for the down payment, closing costs, and cash reserves together. Lenders often want to see liquid funds left after closing, and the amount varies by lender and loan size. Down payment planning that covers only the purchase price leaves you short at the closing table.
Multifamily lenders evaluate the building first and the borrower second. The core question is whether the property earns enough to cover the loan, so most underwriting starts with income and occupancy.
Net operating income (NOI) is the building’s rental revenue minus operating expenses such as taxes, insurance, maintenance, and management, before any loan payment. Debt service coverage ratio (DSCR) divides NOI by the annual loan payment. A DSCR of 1.0 means income exactly covers the payment, and lenders usually want a cushion above that. So what DSCR do you need for a multifamily loan? Many look for something near 1.20x to 1.25x or higher, though standards differ.
Occupancy comes next, since a half-empty building produces less reliable income. Lenders also review the rent roll, which lists each unit and its rent, along with the building’s condition and the market around it.
Then they look at you. Multifamily mortgage lenders often consider liquidity, credit history, and your experience owning or managing similar properties, and some ask for personal guarantees. These factors can raise or lower the down payment a lender requires, which is why two investors buying the same building may receive different offers.
Finally, lenders compare the type of financing to the plan. Multifamily investment loans for a stabilized hold are underwritten differently than short-term loans for a building you plan to renovate.
Yes. For 5+ unit buildings, rental income is usually the main qualifier, because lenders treat the property as the source of repayment. Strong, documented income can improve your approval odds and your terms, but it does not replace equity.
Here is a simple illustration. Suppose a building produces $240,000 in NOI and the annual loan payment is $190,000. The DSCR is about 1.26, which would meet many lenders’ thresholds. If expenses rise or vacancies grow, NOI falls and the ratio shrinks, so lenders test the numbers with realistic vacancy and expense figures.
Some asset-based lenders go further and offer a multifamily loan with no income verification, so your W-2s and tax returns are not part of the decision. That does not remove the other requirements: the building’s NOI, occupancy, and value still have to support the loan. Multifamily term loans for investors built this way are most relevant to self-employed borrowers or owners whose tax returns don’t show their full income.
Start with the numbers, then match them to the right type of loan. A short checklist keeps you organized:
Next, compare offers rather than accepting the first quote. Multifamily mortgage lenders differ on leverage, fees, and timelines, so ask each one for a written term sheet and compare the maximum LTV, interest structure, fees, and what happens at maturity.
Loans for multifamily homes with five or more units come in several forms, including agency loans, bank loans, and private loans, and each has its own paperwork. Apartment building financing through a bank or agency may take longer than private financing, so build that into your contract deadlines.
Finally, think about your exit. A long-term hold, a later refinance, and a resale each point toward different loan structures and prepayment terms.
We offer long-term multifamily term loans for investors who own or are buying stabilized apartment buildings with five or more residential units. Eligible properties include apartments, condos, townhomes, and mixed-use buildings that are majority residential, and we prefer 85% or higher occupancy. Loan amounts range from $500,000 to $10 million and up.
We qualify the loan on NOI, DSCR, and asset value rather than your personal income, so we do not require W-2s, tax returns, or employment verification. Our published minimum DSCR is 1.20x to 1.25x. We do not charge upfront fees to apply.
On down payment, our published terms do not list a fixed down payment or loan-to-value limit for term loans. We customize the structure to the deal and your exit strategy, so the contribution depends on the property and the transaction. Talk with us about your specific building before you plan around a number.
You can use our multifamily investment loans for acquisition, refinancing, cash-out refinancing, and portfolio expansion. We lend in 46 states, excluding North Dakota, South Dakota, Arizona, California, and Utah.
If you already own the building, a multifamily refinance loan with us uses the same asset-based approach, and a building that is not yet stabilized may fit our bridge loan first.
To start, share the property address, unit count, current occupancy, monthly rent roll, annual NOI, and your strategy. No personal income documents are needed at that stage.
Yes. Lenders consider the property's rental income to determine whether it can cover the loan payments.
Yes. Some lenders, including InstaLend, offer multifamily loans without requiring personal tax returns or W-2s.