Investors may use loans for multifamily homes for several purposes, including acquiring a stabilized apartment property, refinancing existing debt, accessing equity through cash-out, or expanding a property portfolio. The appropriate financing structure depends on the asset and the intended use of funds. Before applying, investors can review the property’s NOI, DSCR, occupancy, asset value, condition, and existing debt to understand the financial position of the property and how the proposed transaction fits into it.
For a stabilized property, NOI is an important measure of operating performance. It represents effective gross income minus operating expenses and does not subtract debt service. DSCR then compares NOI with annual debt service. These figures can help investors understand the relationship between property cash flow and debt obligations. However, lenders may also review occupancy history, appraised value, property condition, existing debt, and transaction structure. No single metric automatically determines approval or the final loan amount.
When comparing multifamily mortgage lenders, investors may find that requirements vary depending on the lender and loan program. InstaLend’s multifamily term financing is intended for stabilized properties with 5 or more residential units. The stated eligible property types include apartments, condos, townhomes, and mixed-use properties with majority residential space. InstaLend generally looks for 85% or higher occupancy and a DSCR in the 1.20x to 1.25x range. Its multifamily term loans range from $500,000 to $10 million or more.
These loans can be used for acquisition, refinance, cash-out, or portfolio expansion. InstaLend states that its multifamily term loans are evaluated using NOI, DSCR, and asset value rather than personal income, so W-2s and tax returns are not required under this approach. For investors preparing to finance a multifamily property, gathering the rent roll, financial statements, occupancy history, operating expenses, and debt information can help provide a clear picture of the asset. This preparation can also make it easier to discuss the intended use of funds and financing structure with a lender.
