5–9 Unit Small-Balance Multifamily DSCR Loans
Appraisal, Income Formula & Prepayment Options for 5–9 Units
Required Valuation Report: Narrative Commercial Appraisal (Income, Sales Comparison & Cost Approach) + Rent Roll
Underwriting Income Formula: Annual Net Operating Income (NOI after 5% Vacancy & OpEx) ÷ Annual Debt Service
Prepayment Step-Down Structures: 5-4-3-2-1 Step-Down, 3-2-1 Step-Down, or No Prepayment Penalty
Ideal Investor Strategy: Covers 5, 6, 7, 8, and 9-unit apartment properties that fall below $5M Agency Small-Balance minimums or need faster 21-day closings. Flexible prepayment penalty structures (5-4-3-2-1 stepdown, 3-2-1 stepdown, or yield maintenance alternatives). Full recourse and select non-recourse (bad-boy carveout only) shelves available depending on LTV and market tier. Supports mixed-use configurations where residential apartments represent >= 65%–70% of gross building square footage.
1–4 Unit PITIA vs. 5–25+ Unit Commercial NOI Simulator
Loan Daddy LLC · NMLS #2827624 · AZ CMB #CMB-2016143 · Loans made or arranged pursuant to a California Financing Law license, #60DBO-218873 · Canonical Integer _cents & _bps Engine
135 bps · 7500 bps LTV · 6625 bps RateTier-1 Institutional (1.25x+ — Max LTV & Best Pricing)
| Execution Option | Prepay Structure | Est. Note Rate | Prepay Price Credit | Monthly Debt Service | DSCR Ratio |
|---|---|---|---|---|---|
| Option A: Lowest Rate (60-Mo Stepdown) | 5-4-3-2-1 | 6.625% | -100 bps (-1.000 pt) | $6,147/mo | 1.35x |
| Option B: Balanced Par (36-Mo Stepdown) | 3-2-1 | 6.875% | -75 bps (-0.750 pt) | $6,307/mo | 1.32x |
| Option C: Max Cash Flow (10-Yr Interest-Only) | 3-2-1 IO | 7.000% | +38 bps IO LLPA | $5,600/mo | 1.48x |
Many DSCR lenders focus on the property's rent, not your tax returns. Not all applicants will qualify; terms vary by lender. Loans made or arranged pursuant to a California Financing Law license, #60DBO-218873.