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PerplexityQuick answer: A small balance multifamily loan funds an apartment with 5 or more units. Most run from about $250,000 to $10 million. Fannie Mae lends up to $9 million. It allows up to 80% of the value and needs a 1.25x coverage ratio. Freddie Mac now has Conventional Small for $2 million to $10 million. Private DSCR and bridge loans close faster but cost more.
Find your path in 30 seconds:
- Full building and you want a low fixed rate? Start with Fannie Mae loans or Freddie Mac loans.
- Need to close fast with no tax returns? Try DSCR loans.
- Building half empty or needs work? Try bridge loans.
- Not sure? Send us your deal and we will help you pick.
What Is a Small Balance Multifamily Loan?
Home loans stop at four units. Big bank loans start much higher. Small balance multifamily loans fill the gap in between.
They fit buildings with 5 to 50 units. You can buy, refi, or fix up a place. You can pick a short loan to fix it. Or you can pick a long fixed loan to hold it.
These loans need fewer reports. They cost less to close. They close faster.
A duplex or fourplex is different. Lenders treat those as home loans or business loans.
Why Small Apartments Matter Now
Harvard’s Joint Center for Housing Studies found that cheap rentals fell from 22% of the stock to 16% in ten years. The 2026 report says the median rental home is 45 years old.
Old homes need repairs. Repairs need cash. That is where these loans help. You can buy a tired building, fix it, and move to a long loan.
What Do Lenders Check?
Lenders look at you and at the building.
You:
- Credit. Rules vary. Most want a mid-600s score or more.
- Net worth. Agency lenders often want it to match the loan.
- Cash. Some ask for 9 months of loan payments in cash.
- Track record. Local buyers may need little. Out-of-town buyers need past deals.
The building:
- How full it is. Agency lenders want 90% full for 90 days.
- Income. They test the debt service coverage ratio (DSCR). It is net income divided by yearly loan cost.
- Shape. Big repairs point to a bridge loan.
Want to check your file first? Our guide on how to submit a strong loan application shows what to bring.
A Simple DSCR Example
Say your building earns $200,000 a year in net operating income. You want a $2 million loan at 6.5%. The loan runs on a 30 year plan. This is only an example. Rates move.
- Loan cost per year: about $151,700.
- DSCR: $200,000 divided by $151,700 is 1.32x.
- Fannie Mae needs 1.25x. You pass.
To hit 1.25x, you need about $189,600 of income. Less income means a smaller loan. Stuck below the line? See why a low debt coverage ratio blocks a refi and how to fix it.
Which Loan Fits Your Deal?
| Program | Loan size | Max LTV | Min DSCR | Recourse | Typical time |
| Fannie Mae Small Loan | Up to $9M | 80% | 1.25x | Non-recourse with carve-outs | 45 to 60 days |
| Freddie Mac Conventional Small | $2M to $10M | Up to 80% | 1.25x | Non-recourse with carve-outs | 45 to 60 days |
| Private DSCR | About $250K to $5M | Up to 80% | About 1.15x to 1.25x | Varies | 14 to 30 days |
| Bridge | About $500K to $10M | Based on cost | Uses reserves | Varies | 10 to 21 days |
| FHA/HUD | Larger loans | Up to 85% | About 1.18x to 1.20x | Non-recourse | 90 to 180 days |
Private and bridge terms vary. Treat those rows as typical, not as promises.
Learn more: Fannie Mae, Freddie Mac, FHA and HUD, and low doc or no doc loans.
Freddie Mac Changed Its Small Loan Plan
Many guides still list the old Freddie Mac range of $1 million to $7.5 million. That is out of date.
Freddie Mac moved small loans to its main line on April 15, 2026. Read the Freddie Mac news release. The new loan is Conventional Small. It runs $2 million to $10 million.
What does this mean for you? Loans under $2 million no longer fit Freddie Mac. Fannie Mae’s Small Mortgage Loan program or a private DSCR loan may fit better.
Can You Use an SBA Loan?
Usually not. The SBA 504 loan is for owner use. Your firm must use at least 51% of the building. A pure rental does not qualify.
It can work for a mixed-use building if you run your firm there. For more, read our guide to SBA loans for rental property.
What Will It Really Cost?
Rate is just one cost. Check these too:
- Exit fee. Fixed agency loans often use yield maintenance or a step down plan. A step down plan may charge 3%, then 2%, then 1%. Plan your exit first.
- Reports. Expect a value report, a site visit, and a check for spills or waste. The check follows ASTM E1528.
- Set aside cash. Big loans often need cash held for taxes, insurance, and repairs.
- Fees. Ask for a full fee list up front.
Agency Loan or Private DSCR Loan?
Pick an agency loan if:
- Your building is full and steady.
- You want the lowest rate.
- You want non-recourse cover. See the non-recourse rules.
Pick a private DSCR loan if:
- You need speed.
- You do not want to show tax returns.
- Your net worth is low. See how to get a loan with low net worth.
You pay a higher rate for speed and less paper. Our DSCR loan guide shows how it works.
5 Steps to Close With No Delays
- Gather your file. You need a rent roll and a 12 month profit report. Add a list of your assets and a list of your other properties.
- Size the deal. Find your net income. Test the DSCR.
- Pick a lender. Weigh a correspondent lender against a hard money lender. Or learn how to find a table lender.
- Order the reports. Get a value report, a site visit, and a waste check.
- Lock your rate and close. Read the final terms with care.
Want to move faster? See the fastest way to close a loan.
Ready to see your numbers? Request a free deal review. Or contact our team with questions.
Ways to Use These Loans
Value-add. Buy a weak building with a bridge loan. Fix the units. Raise rents. Then sell or refi. Read about a bridge loan for a distressed building.
Fix and hold. Make light repairs. Fill the units. After 90 days of steady pay, move to a long loan.
Build new. Use a construction loan for land and costs. Then switch to a long loan. See our construction loans.
6 Mistakes That Slow Loans Down
- Applying with a building that is under 90% full.
- Sending a messy rent roll that does not match bank deposits.
- Skipping needed repairs.
- Picking a loan for the rate and missing the exit fee.
- Asking a lender who does not fund your size.
- Waiting to order reports until the last week.
For Brokers and Agents
Placing big loans is hard. We help. Our referral programs protect your client and your fee. Our team does the hard work. You keep your client.
Get Your Deal Sized
No two deals are the same. The right loan fits your building, goals, and time.
Start your loan inquiry to get matched with the right program. Or visit Multifamily Lender to see all loan types. Prefer to talk? Contact us.
FAQs
What is the smallest loan size?
It depends on the program. Private DSCR loans can start near $250,000. Many agency lenders start near $1 million. Freddie Mac Conventional Small starts at $2 million.
Can I get a loan with no personal risk?
Yes. Fannie Mae and Freddie Mac loans are non-recourse. You are not on the hook, except for acts like fraud.
How long does it take to close?
Agency loans often take 45 to 60 days. Private DSCR and bridge loans often take 10 to 30 days.
Do I need to have run a building before?
Local buyers often do not. Out-of-town buyers may need to show past deals. Rules vary.
Can I use this on a 2 to 4 unit building?
Those usually need a home loan or a business DSCR loan. These programs start at 5 units.
This post is for general info. It is not legal, tax, or money advice. Rules and rates change. Ask a lender for current terms.
