What changes at five units
Residential DSCR programs typically cover one to four units. Above that, programs lean on commercial underwriting: net operating income, a rent roll, operating statements and a commercial appraisal. The core question is the same, though. Does the property earn enough to cover the debt with room to spare?
Property types
- Five-plus unit apartment buildings
- Mixed-use buildings with retail or office on the ground floor
- Small retail, office and light industrial properties, program by program
- Portfolios that combine residential and small commercial assets
Documents to gather
A current rent roll, leases, the trailing year of income and expenses, property tax and insurance bills, and your entity documents. If occupancy is improving, a short narrative of what you have changed helps underwriting understand the trend.
Questions investors ask about small commercial loans
Is a five-unit building residential or commercial?
For financing purposes, five or more units is generally treated as commercial and underwritten on the income of the property.
Can I cash out on a mixed-use building?
Many small-balance commercial programs allow cash-out refinances on mixed-use property, sized on income and value.
Do you arrange owner-occupied commercial loans?
We focus on investment property. If you or your family would live in any part of the building, it is outside what we arrange.
Want to test the numbers first? Try the DSCR calculator, or read how much cash you can take out.