DSCR Loans for Small Multifamily Properties (2-4 Units)
2-4 unit multifamily properties are the sweet spot for DSCR lending — residential financing with multiple rent streams. Here's how the math works and what to expect.
The Multifamily DSCR Advantage
Small multifamily properties (2-4 units) typically produce higher gross rent per dollar invested than single-family homes, and that higher rent-to-price ratio translates directly into stronger DSCR ratios. This makes 2-4 unit properties among the most DSCR-loan-accessible investment types in residential real estate.
The "Residential Zone" Advantage
Properties with 1-4 units are classified as residential for lending purposes, which means:
- Residential appraisal standards (not commercial income approach)
- Residential DSCR loan programs with residential rates
- 30-year fixed-rate loan availability
- LTV up to 80% available (with strong credit and DSCR)
At 5+ units, properties become commercial multifamily — requiring commercial appraisals, commercial underwriting, and typically 20-30% more restrictive LTV and rate terms.
Combined Rent DSCR Calculation by Unit Count
Here's a real-world comparison across property types in a secondary Midwest market at similar per-unit pricing:
Duplex (2-unit)
- Purchase: