Best loans for small apartment buildings
Small buildings borrow small: in 2025 HMDA data, 64.3% of 2025 multifamily originations were on 5 to 24 unit buildings, and the typical loan was the $725,000 median loan on 5-24 unit properties. Fannie Mae small loans go up to $9 million nationwide; Freddie Mac Conventional Small runs generally $2 million to $10 million. Below that, banks, credit unions and non-bank DSCR lenders do most of the lending.
The scorecard
How it is ranked: Programs that finance existing 5 to 50 unit buildings, scored out of 100. The largest weight goes to whether the program makes loans of the typical size for these buildings ($725,000 median loan on 5-24 unit properties and $2.4 million median loan on 25-49 unit properties, from 2025 HMDA data), then to recourse, leverage and amortization, then to how few approvals it needs. Rate is shown but not scored, because too few of these programs publish a spread to compare. Construction and private money are scored on the value-add ranking instead.
Data: index readings through October 30, 2026; program figures dated March 19, 2021 to November 1, 2026, each listed with its date under Sources. Computed November 1, 2026.
Limited to programs that lend on this property type. Leverage norms and every program that finances it: Small apartment buildings.
| Criterion | Points | What scores best |
|---|---|---|
| Makes loans of the typical size | 25 | A published size range that includes each of the 2 reference loan sizes (a program that publishes no size limit scores zero, like any unpublished figure) |
| Recourse | 20 | Non-recourse, then partial, then varies by lender, then full recourse |
| Max LTV or LTC | 20 | The highest published maximum LTV (LTC for construction) |
| Max amortization | 20 | The longest published amortization, which lowers the payment and raises the loan a DSCR test allows |
| Approvals before funding | 15 | The fewest outside approvals before funding (tiers listed under the table) |
| Rank | Program | Score | Makes loans of the typical size | Recourse | Max LTV or LTC | Max amortization | Approvals before funding | Indicative rate (not scored) |
|---|---|---|---|---|---|---|---|---|
| 1= | Fannie Mae Small Loans | 65 | 2 of 2 max up to $9 million nationwide 25 pts | Non-recourse (standard carve-outs) 20 pts | 80% max LTV2 10 pts | Not published 0 pts | 3: Outside rules and reviewers 10 pts | No verified spread |
| 1= | FHA 223(f) multifamily loans | 65 | Not published 0 pts | Non-recourse (standard carve-outs) 20 pts | 87% LTV5 20 pts | Up to 35 years (or 75% of remaining economic life), minimum 106 20 pts | 4: Federal agency review 5 pts | No verified spread |
| 3 | Freddie Mac small balance loans (Conventional Small) | 62.5 | 1 of 2 min generally a $2 million floor, max generally a $10 million ceiling (loans of $10 million or less) 12.5 pts | Non-recourse (standard carve-outs) 20 pts | 80% (7-year+ terms); 75% (5 to under 7 years)3 10 pts | 30-year amortization3 10 pts | 3: Outside rules and reviewers 10 pts | No verified spread |
| 4 | Fannie Mae DUS multifamily loans | 50 | Not published 0 pts | Non-recourse (standard carve-outs) 20 pts | 80% max LTV4 10 pts | up to 30-year amortization10 10 pts | 3: Outside rules and reviewers 10 pts | 5.99 to 6.59% 10Y UST + 105 to 165 bps11 |
| 5= | Commercial bridge loans | 28.3 | Not published 0 pts | Varies by lender 13.3 pts | Not published 0 pts | Not published 0 pts | 2: The lender's credit committee 15 pts | 6.80 to 7.49% 30d SOFR + 290 to 359 bps1213 |
| 5= | Credit union commercial real estate loan | 28.3 | Not published 0 pts | Varies by lender 13.3 pts | Not published 0 pts | Not published 0 pts | 2: The lender's credit committee 15 pts | No verified spread |
| 5= | Non-bank DSCR commercial loans (5+ units, mixed-use) | 28.3 | Not published 0 pts | Varies by lender 13.3 pts | Not published 0 pts | Not published 0 pts | 2: The lender's credit committee 15 pts | No verified spread |
| 8= | Bank commercial mortgage | 21.7 | Not published 0 pts | Full recourse 6.7 pts | Not published 0 pts | Not published 0 pts | 2: The lender's credit committee 15 pts | No verified spread |
| 8= | Portfolio and blanket loan | 21.7 | Not published 0 pts | Full recourse 6.7 pts | Not published 0 pts | Not published 0 pts | 2: The lender's credit committee 15 pts | No verified spread |
Approval tiers here: tier 2 (the lender's credit committee): Bridge loan, Credit union loan, DSCR loan, Bank loan, Blanket loan; tier 3 (outside rules and reviewers): Fannie Mae Small, Freddie Mac small balance, Fannie Mae DUS; tier 4 (federal agency review): HUD 223(f). What each tier means: the fastest-to-close ranking and methodology.
Read the score with one caveat
The scorecard rewards terms a program commits to in writing. Agency and FHA programs publish their leverage, coverage, amortization and recourse rules, so they score well. Banks, credit unions and private lenders negotiate every term, so they score low on paper even when they win the deal. FHA 223(f) scores near the top because it publishes the most generous leverage and amortization, but it earns nothing on the size line, because HUD publishes no loan size limit to test. Its catch is the federal review and the fixed costs that come with it, which weigh more on a small loan. Use the score to see what each program promises, and the decision table below to pick where to start.
Pick by loan size and situation
| Your deal | Start with | Then try | Why |
|---|---|---|---|
| Stabilized building, a loan too small for agency non-recourse terms | Community bank or credit union | Non-bank DSCR lender | Fannie Mae: Non-recourse available for most loans above $750,0004. Local lenders know the block |
| Stabilized building, a loan up to the Fannie Mae small loan cap | Fannie Mae small loan | Bank, then Freddie Mac Conventional Small above its floor | Long amortization and non-recourse terms |
| Stabilized building, loan inside generally $2 million to $10 million | Freddie Mac Conventional Small and Fannie Mae small, side by side | Life company if leverage is low | Two agency programs bidding on one loan |
| Highest possible proceeds, time to wait | FHA 223(f) | Agency small loan | 87% LTV5 and a fully amortizing loan |
| Building needs renovation or lease-up | Bank renovation loan or bridge loan | Credit union | Agency loans want stabilized occupancy first |
| Credit, income documentation or speed rules out a bank | Non-bank DSCR lender | Private lender | Sizes on the property’s income, not your tax returns |
| Ground-floor retail | Bank or credit union | Fannie Mae small or FHA 223(f) within its commercial limit | FHA 223(f): Commercial up to 25% of net rentable area and 20% of effective gross income6 |
Small buildings pay more, and why
HMDA rates for 2025 fall as the building grows: the 6.75% median rate on 5-24 unit properties1 compares with the 6.35% median rate on 25-49 unit properties1. The lender’s cost to underwrite, appraise and close a loan barely changes with size, so it shows up as rate on a small loan. Small loans also skew toward bank balloon loans: across all 2025 apartment loans, 75.2% carried a balloon payment1. The state-by-state HMDA rates show the same pattern by market.
Worked example: a 14-unit building
Illustration. A 14-unit building appraised at $1,450,000 with $98,000 of net operating income. Each loan below is sized by the lower of its LTV and coverage tests at an illustrative rate.
| Loan (illustration) | Assumed terms | Largest loan | Monthly payment |
|---|---|---|---|
| Agency small loan | 80% LTV, 1.25x coverage, 30-year amortization, 6.50% | $1,033,600 (coverage binds) | $6,533 |
| Bank 5-year balloon | 75% LTV, 1.25x coverage, 25-year amortization, 6.75% | $945,600 (coverage binds) | $6,533 |
| Non-bank DSCR loan | 75% LTV, 1.20x coverage, 30-year amortization, 8.00% | $927,500 (coverage binds) | $6,806 |
The payment is about the same in each case because the coverage test sets it. What changes is how much loan that payment buys. The agency loan’s longer amortization and lower rate buy about $88,000 more than the bank loan here. The bank loan may still win: it closes faster, carries a step-down prepayment instead of yield maintenance, and the bank will look at a building the agency lender would turn down. Run your own numbers in the DSCR calculator.
What small-building lenders check that big-deal lenders skip
- The sponsor, not just the property. Small-balance lenders often take personal assets or subordinate liens as support: commercial first mortgages often also backed by personal assets or subordinate liens7.
- Your rent roll against the leases. Expect a lender to tie every unit’s rent to a signed lease and to deposits.
- Deferred maintenance. Older small buildings often need roof, boiler or electrical work. Agency small loans use lighter reports: Streamlined inspection and environmental screening (ASTM E-1528-14) instead of full reports2.
- Property type exclusions. Freddie Mac Conventional Small: Excludes student, seniors, MHC and co-op properties; no hard subordinate debt3.
- How many agency lenders compete. Freddie Mac had 22 Optigo Conventional Small lenders (June 30, 2026)8, so the same file can draw several quotes.
Send Janover Capital the building, the rent roll and the loan you need. A person reads it and tells you which of these lenders to call first.
Questions people ask
Can I get a Fannie Mae or Freddie Mac loan on a 5-unit building?
Yes, if the property is stabilized and the loan size fits. Fannie Mae small loans: Existing stabilized conventional, affordable and MHC properties with 5+ units2. Freddie Mac Conventional Small covers predominantly market-rate properties of 5 to 50 units, but its loan range (generally $2 million to $10 million) rules out most very small buildings. Buildings of four units or fewer are residential and finance through residential or investor loans instead.
Is Freddie Mac's Small Balance Loan program still available?
No. Legacy SBL applications accepted until April 30, 20269, and Freddie Mac replaced it with Optigo Conventional Small: Launched April 15, 2026, replacing the Small Balance Loan program9. Any lender still quoting SBL terms is out of date.
Why does a bank loan score low here if banks do most small apartment lending?
Because the score only counts terms a program publishes, and banks publish none: each bank sets its own leverage, amortization and pricing. A bank is still often the right first call for a loan under the agency floors or a building that needs work. The decision table on this page says when.
Related
Sources
- CFPB/FFIEC HMDA 2025 public data, multifamily originations (Data Browser), as of December 31, 2025
- Fannie Mae Multifamily, Small Mortgage Loan Program Term Sheet, retrieved November 1, 2026
- Freddie Mac Multifamily, Optigo Conventional Small Term Sheet, as of April 2026
- Fannie Mae Multifamily, Conventional Properties Term Sheet, retrieved November 1, 2026
- HUD Mortgagee Letter 2025-03, Multifamily Changes in DSCR and LTV/LTC, as of January 8, 2025
- HUD MAP Guide 4430.G (2020 MAP Guide, revision March 2021), as of March 19, 2021
- Ready Capital Corporation Form 10-Q for the quarter ended June 30, 2026 (SEC EDGAR), as of June 30, 2026
- Freddie Mac, Small Balance Loan Program Overview (SB-Deals) Investor Presentation, as of June 30, 2026
- Freddie Mac news release, Launch of Integrated Conventional Small Product, as of April 15, 2026
- Fannie Mae Multifamily, DUS Mortgage Loans Term Sheet, retrieved November 1, 2026
- Northmarq, Rates & Spreads (Multifamily Conventional), as of October 22, 2026
- KKR Real Estate Finance Trust 10-Q, Q3 2026, as of September 30, 2026
- Granite Point Mortgage Trust 10-Q, Q2 2026, as of June 30, 2026
How we check figures: methodology and editorial policy.