Apartment Building Mortgage Calculator
Size multifamily commercial mortgages across Agency (Fannie Mae / Freddie Mac), Commercial Bank, and HUD 223(f) debt programs. Dual-test maximum loan amounts by LTV and DSCR, evaluate debt service, and project post-financing cash flow.
Select Multifamily Loan Program
Apartment Property Operations & Income
Commercial Mortgage Underwriting Terms
Multifamily Debt Program Comparison
| Program | Max Loan | Monthly P&I | CoC Return |
|---|---|---|---|
| Agency (80% / 30y) | $2,240,000 | $13,792 | 11.02% |
| Bank (75% / 25y) | $2,100,000 | $14,179 | 8.15% |
| HUD 223(f) (85% / 35y) | $2,380,000 | $13,332 | 16.00% |
How Apartment Building Commercial Mortgages Are Sized
Commercial apartment building mortgages (5+ residential units) differ fundamentally from 1–4 unit residential home loans. Rather than evaluating borrower personal W-2 income, commercial multifamily lenders underwrite the property itself through two governing mathematical constraints: 1. Loan-to-Value (LTV) Constraint: Limits the loan principal as a maximum percentage of the property appraised value or purchase price (typically 75% for commercial banks, 80% for Fannie/Freddie Agency, up to 85% for HUD 223(f)). 2. Debt Service Coverage Ratio (DSCR) Constraint: Ensures the property Net Operating Income (NOI) exceeds the required annual principal and interest debt service by a minimum safety factor (typically 1.25x for Agency and banks, 1.176x for HUD). The actual loan proceeds sized by the lender will ALWAYS be the lower (binding) of these two constraints. In low-cap-rate or higher-interest-rate environments, DSCR almost always constrains loan sizing below the theoretical max LTV.
The Sizing Formulas
[1. Maximum Loan by LTV]
Max Loan_LTV = Purchase Price × Max LTV %
[2. Maximum Allowable Annual Debt Service by DSCR]
Max ADS_DSCR = Net Operating Income (NOI) / Minimum DSCR Requirement
[3. Maximum Loan by DSCR]
Max Loan_DSCR = Max ADS_DSCR / Annual Loan Constant
where Annual Loan Constant = 12 × [ r(1 + r)^n ] / [ (1 + r)^n − 1 ]
[4. Governing Sized Mortgage Proceeds]
Sized Mortgage = min( Max Loan_LTV, Max Loan_DSCR )Canonical 24-Unit Multifamily Property Case Study ($2.8M Valuation, $227,200 NOI)
Frequently Asked Questions About Apartment Mortgages
What is considered an apartment building for commercial mortgage financing?
In commercial real estate finance, any residential property with 5 or more self-contained living units is legally classified as commercial multifamily. Properties with 1 to 4 units fall under residential consumer mortgage guidelines (Fannie Mae / Freddie Mac residential conforming loans). Commercial multifamily loans are underwritten primarily to the cash flow (NOI) of the property rather than personal debt-to-income (DTI) ratios.
Why do commercial lenders test both LTV and DSCR when sizing multifamily loans?
LTV protects the lender against property market depreciation by requiring borrower equity cushion. DSCR protects against default by ensuring rental income reliably covers mortgage payments. The lower of the two limits determines the actual loan amount. When interest rates rise, DSCR almost always becomes the binding bottleneck.
What are the main differences between Agency (Fannie/Freddie) and Commercial Bank apartment loans?
Agency loans (Fannie Mae DUS / Freddie Mac Optigo) offer non-recourse financing, 30-year amortization, up to 80% LTV, and competitive fixed rates for 5–12 years, but carry stricter prepayment penalties (Yield Maintenance or Defeasance). Commercial banks offer balance-sheet portfolio loans with flexible step-down prepay penalties, but typically require recourse guarantees, 20–25 year amortization, and maximum 70–75% LTV.
What is HUD / FHA 223(f) multifamily financing?
HUD 223(f) is a government-insured loan program for the acquisition or refinancing of existing multifamily properties with 5+ units. It offers the industry highest leverage (up to 85% LTV), lowest DSCR (1.176x), longest fully amortizing term (up to 35 years with no balloon payment), and non-recourse terms, in exchange for higher upfront closing costs, annual MIP (Mortgage Insurance Premium), and longer closing timelines (4–6 months).