🏢How to Get a Mortgage on a 5–8 Unit Residential Property|Daily Rates LIVE

🏢 How to Get a Mortgage on a 5–8 Unit Residential Property
Join us LIVE to review Daily Mortgage Rates and Learn how to finance 5–8 unit residential properties using investor-focused loan programs. We’ll cover qualification requirements, down payments, and how lenders evaluate multi-unit income properties. You’ll also learn about DSCR and other financing options for larger residential deals. Watch a live example showing purchase price, rental income, loan amount, and monthly payment. Perfect for investors scaling beyond small multifamily properties.

📌 Key takeaway: 5–8 unit properties can significantly expand cash flow and portfolio growth.

Catch all the episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

Check out all episodes of Daily Mortgage Rates LIVE at https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast

The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation! 

Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!

Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as Bank Statement Mortgages...

Transcript

Speaker 0:13

Alright, welcome everyone. My name is Nick Hiersche here with the mortgage calculator. We are a lender and broker in over 20 states, and we have hundreds of loan officers here. We would be happy to help out anybody out there looking for a quote for any of our standard scenarios as well as our specialty items, such as our topic for today, where we will be discussing small multifamily properties and our DSCR loan product, one of our favorite products that can apply to even small commercial properties, what would be considered commercial. But what we'll do today, we will check out the market conditions, a lot of news, consumer prices just came in, not necessarily in our favor, and we'll check out what that means for our live rates. We'll pull up our actual live rates for our standard programs, and then I have an example here for a six-unit property. We'll review and explore a purchase and refinance option for that property. So let me go ahead and start today and switch my screen. And as usual, the first thing we want to look at when we're looking at mortgage rates are the 10-year treasury yields. That's typically going to track with rates overall, especially when we're talking about mortgage rates in general. Lots of different programs, lots of different options. We'll typically want to look at the 10-year treasury yield. So here we see recently we've had a pretty big spike with a lot of the news. Some of the reports haven't been in our favor. Obviously, there's a war going on. And if we pull this back over the last year, uh you can see it's a little bit behind me there. We can see we're pretty much at one-year peaks here. Hopefully, we get back down to one year lows, which we were at just before a lot of this news uh started here. This they war items and hits to the consumer price index, all the other things that have been negatively affecting us, uh kind of kicked off here right when we were at one year lows. So hopefully we turn this back around and get back down in that direction. Now, what does that mean for rates? So rates don't always change every second of the day. So it's always good to look at the actual live rates. So if you go to our website and click on today's rates, always check out the actual live rates for our standard programs. And we set up a very simple scenario so we can compare the lowest rate options for all the programs side by side. So we do a standard one unit single family home, 500,000 purchase, 300,000 loan amount. That's 60% loan to value, estimated 760 FICO credit score, and an estimated 40% debt to income ratio. That way we can compare these all side by side. So first up here, our conventional option, standard 30-year fixed loan, what most people think of when they think of a mortgage. Uh, conventional is coming in at 6.25 lowest rate option. Final APR there is 6.516. So just a touch above what it was last week, not a huge difference there. And if our customer has any trouble with conventional, we typically want to explore an FHA option. FHA has a little more leniency on debt to income and overall credit issues, uh, but does require upfront in your leak mortgage insurance, which is why you see uh the rates are great here, 5.625 rate, but with the additional costs and fees there, APR comes in at 6.534, just a hair above conventional, which is pretty standard. And if our customer qualifies for VA, VA programs are amazing, rates as low as 5.75 today. Final APR comes in at 5.984, just a little below six. So much favorable to FHA or conventional. So if our customer qualifies for VA, that's typically always going to be the best option for them. And for USDA eligible properties of the rural areas of the country, USDA programs are amazing here. If our customer qualifies with the income and the property qualifies, we can get rates as low as 5.625 today, final APR 6.336, which is lower than FHA or conventional for the exact scenario. So typically, if the customer and property qualify, we want to explore USDA as it may be the best option. And where we love to shine here at the mortgage calculator is our options that go beyond the standard. So we have our non-QM options, so non-standard options where we can use alternative docs such as bank statements, 1099s, etc. And for a primary home, if our borrower doesn't qualify for a standard conventional FHA, VA, et cetera, we can switch to alternative docs and offer a rate that's almost the same. There, 6.375 rate, just a touch higher than conventional. And final APR comes in at 6.64, again, just a touch above conventional. So it's pretty amazing to be able to switch our borrowers into a program where they would not qualify before, into a program they do qualify for, and the price is almost identical. And for our investors out there, we can use alt docs for investment properties. Rates this morning come in at 6.5, final APR 6.831, which we compare to conventional options for investment properties. Conventional comes in at 6.375. Final APR there, 6.693. So a little bit lower than our alt dock options, but not lower than our favorite investor option here, our DSCR programs. So DSCR stands for debt service coverage ratio. It's our topic for today as well, where we simply use the estimated rents for the property to determine a DSCR ratio. Estimated rents cover the expenses, aka the property will cash flow monthly. That is a ratio over one, which is what we set for these scenarios. And we have a three-year prepayment penalty, which is pretty standard, coming in as rates as low as 6.25, final APR 6.538, which is better than conventional, which is absolutely amazing. And we can make it even better if we add a five-year prepayment penalty for our aggressive investors. Uh, five-year prepay comes in at 6% rate flat today, final APR 6.308, which is much better than conventional or alt doc options. So typically the DSCR is the best option for our investors out there. Now, if you continue to scroll down the page, we have dozens of other options for second mortgages, ELOCs, rehab loans, fix and flips, all kinds of options here. Uh, but let's talk about an option today that we aren't able to display live because it's a pretty unique scenario. So we do have some very cool DSCR programs that allow us to uh treat a otherwise commercial property as a standard residential property with a standard DSCR loan. So what we're talking about here is our five plus unit properties. So anything over five units is technically commercial multifamily property. Four unit property can still be you know a primary home, but a five unit and greater property is a true commercial property. So for those, as long as it's between five to nine units or five to eight units, depending on the exact program, we can offer our standard DSCR loan. So, first off, here I have a property. I use Prexy today to find a property here nearby me that was over five units. And this property we found here in the Coconut Creek area looks like a nice little apartment complex. It's pretty small, it's $1.125 million here, and it is a six-unit multifamily property. So this is the perfect example of a property that we could use our program to purchase or refine it. So I have a quote here for purchase as well as a quote for refinance here for this exact property in this exact scenario. So the program we have here is our five to nine unit DSCR. We can do a purchase at 25% down if we have the high credit score and the ratio, the DSCR ratio that supports it. And we added a five-year prepayment penalty here in order to get the best rates and pricing. But we are putting more down than your typical one or one to four unit property there. So typically the ratio will work out in most of the examples that we quote. And we can do up to 75% LTV for purchases with the 760 estimated credit score we're using on this, or rate and term refinances, and we can go up to 70% for cash out. So this first example is the max LTV of 75% LTV on a purchase, 25% down. Another thing to consider is because this is our standard DSCR, we're not going to do the uh same items that a commercial loan for this commercial property would typically require. So many times a commercial loan will use something like a global DSCR or include additional expenses like utilities. In this case, we're doing standard DSCR where it is just the estimated rents or actual rents divided by the P I T I A of the mortgage. So very simple, much more attractive rates here. You'll see in a second. Our commercial loans will be coming in around 9 to 10% right now. But if you see here, if we add the five-year prepay to our standard five to nine unit DSCR, we can get amazing rates as low as 7.625. Pretty amazing there for 3.225 discount points and costs. And we have an option here, 8.375 rate at a lower cost here of 1.35. Now, this is a pretty amazing option for our investors that are used to uh commercial loans. They'll see that these are much more favorable terms, much uh easier underwriting, uh, much less documentation, but just a great uh loan overall for our investors that are doing those small residential multifamily properties here. So you see here this was 75% LTV, 25% down. We did use the five-year prepayment penalty, and we did use the estimated 760 FICO credit score. So this is an amazing option for our investors out there again, looking for those uh unique uh small multifamily properties where they could still use a standard DSCR loan. Now, if the owner of this property didn't want to list for sale, because that one's for sale, that's why we approached the purchase scenario there. Uh if the investor wanted to cash out, which is typically our second most popular request, uh so if this investor instead of selling a property just needed to access some of the uh equity there, we can do a cash out refinance up to 70% loan to value, and we did add that same five-year prepayment penalty for this scenario, and we still have to hit that 1.15 DSCR ratio, which is typically not that big of a concern when we have a multifamily property. So here everything else is the same. All my other notes here, uh it's the same program, uh, same structure. And you see here the rates are just a touch different. 7.5 rate has a cost of 3.225 discount points in cost, and our 8.375 rate has a cost of 0.975 for our lowest cost option. And this allows us to access up to 787,500 loan amount in this case, which is the 70% LTV on the estimated $1.125 million value there for our estimated property. And uh everything else here is still the same. We use that estimated $760 credit score and that five-year prepayment penalty. But again, another great option for our investors out there looking for a simple DSCR that is typically reserved for residential one to four units. We can offer that for our five to nine unit small multifamily properties. So a very cool option here. Hopefully, that helps out some of our investors out there uh that are looking at some of those properties that are similar. Or if you didn't know that we could offer the standard DSCR, now you can uh access that through our five to eight or five to nine. So some uh programs limited to eight, some programs limited to nine. The one I explored today does allow us to go up to nine units, actually. So if you have any questions about any of the scenarios, you can go to our website, themortgegescalculator.com, request a quote, we'll connect you with a loan officer that is licensed in your state, and they would be happy to quote you in just a few minutes, hopefully. And hopefully we see some rates improve here over the week and we get some better news. But we'll be back later this week with another episode of Daily Rates Live, so we can actually check out the markets overall. Thanks everybody, have a great day.