Multifamily loans for five or more units are priced and approved on the property's income, not your paycheck. The lender's entire risk model shifts to the building's net operating income and the debt service coverage ratio. Once you understand that shift, you can stop shopping for a bank like a homebuyer and start negotiating like an owner of a cash-flowing asset. The standards, the loan programs, and the traps that catch buyers who come in cold are laid out below.

Apartment buildings are the only commercial property type where the tenants' leases are short, typically a year, and the building keeps producing rent even when individual units turn over. That fundamental difference makes lenders treat multifamily as lower risk than an office building with one anchor tenant or a retail center dependent on a grocery store. Because the risk is lower, multifamily mortgage rates run about 25 to 50 basis points below what you would pay on a non-residential commercial loan with the same loan-to-value and term.

The other difference is the underwriting target. A lender underwriting a 10-unit building does not care whether you have a W-2 job. The net operating income must cover the debt service with a cushion. That cushion is the debt service coverage ratio, and for most agency and bank programs the floor sits at 1.If you are looking at a building where the rents are below market, the lender will underwrite the actual rent roll, not the potential one, unless you have a signed lease for a higher amount already in place.

Fannie Mae's Delegated Underwriting and Servicing model, which delegates approval to approved lenders, offers fixed-rate loans with terms from 5 to 30 years, amortization up to 30 years, and a maximum loan-to-value of 80% for existing properties. The minimum loan amount is $1 million, so this is not a small-balance product. The maximum LTV for HUD 223(f) is 85%, but the approval process is slower and the property must meet HUD's physical inspection standards. The rate is fixed, and the loan is non-recourse, but you cannot get an interest-only period, which the agency programs allow up to 10 years.

Banks and credit unions serve the smaller end, typically loans under $3 million. These are balance-sheet loans, often with a 5-year term and a 25-year amortization, a balloon payment due at maturity, and a personal guarantee. A bridge lender, in contrast, offers short-term money, 1 to 3 years, interest-only, at a higher rate, for value-add deals where you plan to raise rents, fix deferred maintenance, and refinance into permanent debt. The Fannie Mae Multifamily Selling and Servicing Guide, Freddie Mac Optigo term sheets, and HUD 223(f) program page publish the specific underwriting standards and current terms, and those documents, not any third-party summary, are the authority on what a given loan requires.

Fannie Mae is the benchmark that every other lender prices against. The DUS program lets approved lenders underwrite and service loans with delegated authority, which means a decision can come in weeks, not months, and the borrower gets the same non-recourse terms as a much larger deal. The minimum DSCR is 1.25 times, the maximum LTV is 80% for existing buildings, and the debt yield floor is 10%, which means the net operating income divided by the loan amount must be at least 10%. That debt yield test is the one most borrowers miss: it ignores the interest rate entirely, so a building with thin income cannot get a loan even at a low rate if the loan amount is too high relative to the income.

Fannie Mae allows prepayment flexibility through yield maintenance or a 1% minimum prepayment premium. The Fannie Mae DUS Guide, current as of the 2026 edition, is the document that governs these terms, and the actual rate you pay depends on the lender's spread, your property's leverage, and the rate lock period, which can extend up to 24 months. Freddie offers a small-balance loan program for properties between $1 million and $5 million, which Fannie's DUS product does not always cover efficiently, and its underwriting can be more flexible on properties with near-term lease rollovers. The two agencies' rates move in lockstep, but the lender's relationship and the specific property's story matter. If your property is in a secondary or tertiary market, or the rents are below the area median, Freddie's execution may price better. The HUD 223(f) program page lists the per-unit mortgage limits, and the origination fee is 1%, the same as the agencies.

The agencies publish their own rate sheets, but the actual rate you get is negotiated with the lender, and it moves with the rate lock date, not the application date. The interest-only period lowers the payment but does not lower the risk. The Fannie Mae DUS Guide and Freddie Optigo term sheets state that the rate is fixed for the full term, and the yield maintenance is calculated as the present value of the remaining payments at the current Treasury rate. Do not chase a lower rate from a smaller lender if the underwriting standards are looser. The DSCR measures cash flow, and the lender's minimum is usually 1.25 times, meaning the property's net operating income must exceed the annual debt service by 25%. A building with a $100,000 NOI can support a $1 million loan at a 10% debt yield, but only a smaller loan at a 13% debt yield, even if the DSCR works on paper.

Lenders also underwrite the rent roll conservatively. They use the actual in-place rents, not the market rents, unless the property has signed leases for the higher amounts. The appraisal is the lender's risk control, not a valuation of your deal, and a low appraisal can kill the loan no matter how strong the income statement looks.

Most multifamily loans are not fully amortizing, which means a balloon payment comes due at the end of the term. A 10-year loan with a 30-year amortization has a balance of roughly 75% of the original amount after a decade, and the borrower must refinance or sell. The refinance risk is that the property's value has dropped, the rates have risen, or the net operating income has not grown enough to meet the new loan's DSCR and debt yield tests.

The classic failure is the interest-only trap. A borrower takes an interest-only loan at 75% LTV, the property value drops 10%, and the balloon cannot be refinanced because the LTV is now above the agency's 80% cap. The remedy is to underwrite the refinance, not the purchase: stress-test the property at a higher rate, a lower DSCR, and a longer amortization, and have a plan for a capital call or a sale before you sign the original loan.

When the agencies say no, or the property is too small or too distressed for their minimums, the bridge lender is the first option. They will finance a value-add deal at 70% to 80% LTV with interest-only payments, but at a rate 200 to 400 basis points above the agencies. For a building under $1 million, the Fannie and Freddie minimums do not apply, and a credit union or a regional bank is your only source. The one thing you should not do is sign a personal guarantee on a bridge loan without a clear exit, because the balloon will come due regardless of the market.

Every number, from the 1.25x DSCR to the 10% debt yield, is published in the Fannie Mae DUS Guide, the Freddie Mac Optigo term sheets, or the HUD 223(f) program, and those documents are revised on a schedule.

The exact figures can and do change, and the rate environment moves daily, so treat any specific number here as an approximation that sets your expectations, not as a guarantee. Your job is to walk in knowing the questions to ask, and to verify the current standards against the agency’s published guides before you sign anything.