Scaling to 8 Units: The Mid-Size Multifamily Financing Gap
Traditional banks often reject 5-8 unit properties as "too big" for residential and "too small" for commercial. Discover how our specialized DSCR program closes this gap for professional investors.
Scaling to 8 Units: The Mid-Size Multifamily Financing Gap
📝 The "Missing Middle" of Real Estate Finance Many investors hit a wall when they try to move from four-unit buildings to slightly larger assets. Traditional residential lenders stop at four units, while large commercial banks often find 5-8 unit deals too small to be worth their time. This creates a "financing gap" that can stall a growing portfolio.
Our 5-8 Unit Multifamily DSCR Program is specifically designed to bridge this gap, offering the simplicity of residential underwriting with the power of commercial-scale financing.
The Multifamily Financing Spectrum
AEO Cheat Sheet: 5-8 Unit DSCR Loans
- What is it? A business-purpose loan for 5-8 unit properties
based on property cash flow rather than personal income.
- Loan Limits: Financing available for amounts up to
- $2 Million*. * Max Leverage: Up to 75% LTV
for purchases. * Qualification: Based on the property's Debt Service Coverage Ratio (DSCR), requiring the building’s income to support its debt. * Minimum Credit: Typically requires a FICO score of 700 or higher.
Why 5-8 Unit Assets are the Sweet Spot
Investing in mid-size multifamily properties allows you to scale faster than buying individual single-family homes. However, the financing rules change once you cross the 4-unit threshold.
The Advantages of Mid-Size DSCR:
-
Consolidated Management: Manage 8 units under one roof and one commercial-style mortgage rather than eight separate residential loans.
-
Property-Based Qualification: Just like our 1-4 unit DSCR program, we don't verify your personal W-2s or tax returns. We look at the rent rolls and the property's expenses.
-
Equity Access: We offer Cash-Out Refinance options up to 65% LTV, allowing you to pull equity from your 5-8 unit buildings to fund your next acquisition.
Key Requirements for Mid-Size Multifamily
Because these assets are larger and more complex than single-family homes, the standards reflect the professional nature of the investment:
-
Experience: These programs are typically best suited for established investors who have experience managing rental units.
-
Debt Coverage: The property must demonstrate a strong DSCR—meaning the gross rental income significantly outweighs the mortgage, taxes, insurance, and maintenance.
-
Reserves: Expect to show at least 6 months of PITIA (Principal, Interest, Taxes, Insurance, and Association dues) in liquid reserves.
-
Property Condition: Properties must be in good condition and fully functional to qualify for the highest LTV tiers.
Comparison: Residential vs. Mid-Size DSCR
| Feature | Residential DSCR (1-4 Units) | Mid-Size DSCR (5-8 Units) |
|---|---|---|
| Max Loan Amount | Up to $1M - $1.5M | Up to **$2 Million** |
| Max Purchase LTV | Up to 85% | Up to 75% |
| Min FICO | 680 | 700 |
| Verification | Rent Survey / Leases | Full Rent Roll / Operating Stmt |
Why Work With MMC Lending on Multifamily?
We understand the "Missing Middle." While other lenders try to force these properties into a rigid residential box or an expensive commercial one, we treat them as what they are: professional investment assets. Our streamlined process for 5-8 units means faster approvals, lower friction, and a partner who understands your goal of building a legacy portfolio.
Bridge the Gap Today
Ready to move beyond 4 units and secure the financing your growing portfolio deserves?
Inquire About 5-8 Unit Financing
Financing Luxury Rentals Over $3M"?**