Can I use a DSCR loan for a duplex, triplex, or fourplex?
The short answer
Yes. DSCR loans work on duplexes, triplexes, and fourplexes, and the ratio uses the total rent from all the units. Expect a down payment of about 25% on most 2 to 4 unit programs. Properties with five or more units usually need a commercial or multifamily loan instead. The Mortgage Advisory finances 2 to 4 unit rentals and can point you in the right direction for larger buildings.
How is the ratio calculated on a multi-unit?
Add up the rent from every unit, then divide by the full monthly payment:
- Unit A: $1,800
- Unit B: $1,750
- Unit C: $1,700
- Total rent: $5,250 ÷ payment $4,700 = DSCR 1.12
Rent comes from the current leases or the appraiser's market rent for each unit.
What if one unit is vacant?
Many programs use the appraiser's market rent for a vacant unit, but some reduce it or want a lease in place. Tell me up front so we pick the right program.
Can I live in one of the units?
Not with a DSCR loan; it's for investment properties only. If you want to live in one unit, look at an FHA, VA, or conventional loan for owner-occupied 2 to 4 unit properties, which can need much less down.
What about 5 or more units?
Five units and up is considered commercial multifamily, which uses different loans and underwriting. Some DSCR lenders do 5 to 8 units under a separate program. I'll tell you which way to go.
Our take
Small multi-units are one of my favorite investor properties: one roof, one insurance policy, several rents. Make sure each unit's rent is realistic and the building's repairs are in your budget, and I'll handle the financing.
Ace Ausar, Mortgage Banker · NMLS #1143018
The Mortgage Advisory, Inc. · NMLS #1549739
Reviewed by Ace Ausar, NMLS #1143018 · Updated
Have a question about your situation?
Talk it through with our team — no pressure, no jargon.