Property Type
DSCR loans for 2-4 unit multifamily (duplex / triplex / fourplex)
In short
A 2-, 3-, or 4-unit property is RESIDENTIAL investment property under standard DSCR programs. It is NOT commercial. The same DSCR programs available for single-family rentals support 2-4 unit multifamily, with a slightly tighter LTV cap (typically 75% vs 80% for SFR) and modest rate adjustments per unit. 5+ unit is commercial / multifamily DSCR - a different program path entirely.
Program highlights
- Standard DSCR programs cover 2-4 unit residential investment
- Duplex: priced ~0.125% above SFR DSCR; 75% LTV max purchase
- Triplex / fourplex: priced ~0.125%-0.250% above SFR DSCR; 75% LTV max
- All-unit-rent combined into the DSCR calculation
- Vacant unit at appraisal time uses appraiser market rent, not zero
- LLC vesting standard, same close timeline as SFR DSCR (21-30 days)
Who this fits
- You own or are buying a duplex, triplex, or fourplex
- The property is residential investment (not commercial mixed-use)
- You have at least one unit leased at the appraisal date (or accept vacant-unit market rent)
- You meet standard DSCR program requirements (620+ FICO, 1.0+ DSCR on combined rent)
How the process differs
Same DSCR app + appraisal + close as SFR. The appraisal does both a sales-comparison and a rent-comparison for each unit. Lender combines all unit rents (actual lease, or market rent for vacant) into the DSCR numerator.
What to watch for
- Rent loss insurance is typically required on 2-4 unit DSCR (covers the lender if one unit goes vacant during a loss event). Cost is modest, ~$100-200/yr.
- Multifamily appraisals take longer than SFR (10-14 days vs 5-7 days). Plan close dates accordingly.
- Mixed-use properties (residential + commercial space, e.g. apartments over a storefront) are NOT standard DSCR - they need a specialty mixed-use program.
- Properties zoned multi-family but actually used as single-family (e.g. a converted triplex now used as a single SFR) get priced as SFR for DSCR purposes.
Frequently asked
Is a 4-unit property commercial?+
No. 1-4 units is residential investment property under DSCR. 5+ units is commercial multifamily DSCR (different program path on dscrdirect.net - "Have a commercial property?" button).
How are rents combined in the DSCR calculation?+
All unit rents add together for the numerator. PITIA stays the same regardless of unit count. So a fourplex at $1,200/unit (= $4,800 total) with a $3,500 PITIA has a DSCR of 1.37.
Can one unit be owner-occupied?+
No - DSCR is for investment property only. If one unit is owner-occupied, you need a 2-4 unit conventional loan (owner-occupied investor) which qualifies off your personal income.
What if I want to add an ADU?+
Existing legal ADU income counts as additional unit rent for DSCR. Future / planned ADUs do not count for current underwriting.
Are the rates same across 2/3/4 unit?+
Slight steepening per unit. Duplex vs SFR is ~0.125%; fourplex vs SFR is ~0.25%. Lenders bucket these.
Run your scenario
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