California Multifamily and Apartment Loans
Westpark Loans arranges purchase, refinance, cash-out, and value-add financing for apartment properties across California. Westpark Loans is a licensed California mortgage broker, so a file is shopped to the lenders whose programs actually fit the property rather than pushed into a single in-house product.
Lenders typically size a multifamily loan around the property’s net operating income and its debt service coverage ratio, meaning how much income the property generates relative to the loan payment it would carry. This is different from a residential loan, where the borrower’s personal income is usually the primary qualifying factor. A property with strong, stable rents can often support a larger loan than the same borrower could qualify for on a residential basis alone.
Office, retail, industrial, and owner-user property is handled as Commercial Real Estate Loans.
What Is a Multifamily Loan?
Multifamily generally refers to apartment properties of five units or more, which are underwritten as commercial real estate based on the property’s income. Properties of two to four units are typically financed differently, more like a residential loan than a commercial one.
That five-unit line matters more than most owners expect. It changes which lenders will look at the file, what documentation is required, how the loan is sized, and whether the borrower can be an entity. If you are unsure which category your property falls into, we can sort that out before you apply.
MULTIFAMILY QUALIFICATION GUIDELINES
The descriptions below are general and based on typical transactions. They are not a loan offer, a rate quote, or a commitment to lend. Actual terms depend on the property, its income, and underwriting at the time of application.
Typical parameters may include:
- Property types: garden-style, mid-rise, and high-rise apartment buildings of five units or more, and mixed-use properties where residential income makes up the majority of the property’s income.
- Loan purposes: purchase, rate-and-term refinance, cash-out refinance, and value-add or renovation financing ahead of stabilization.
- Recourse and non-recourse: both may be available. Non-recourse structures are more common on larger, stabilized properties with established cash flow. Smaller properties, newer investors, and value-add deals more often involve some form of recourse or a partial guaranty.
- Entity borrowers: LLC, LP, and corporate borrowers are standard and routine.
PROGRAM STRUCTURE
Multifamily loan structures may include:
- Purchase financing to fund the acquisition of an apartment property.
- Rate-and-term refinance to improve an existing loan’s structure or extend its maturity.
- Cash-out refinance to draw equity out of a stabilized property, often to fund another acquisition or a renovation elsewhere in a portfolio.
- Value-add and transitional financing structured around a property that needs lease-up, renovation, or repositioning before it produces stabilized income, typically underwritten with a plan for how the property moves to permanent financing afterward.
MULTIFAMILY LOAN TERMS
Typical loan parameters may include the following. Guidelines vary by lender, property, and borrower profile.
| Feature | Details |
|---|---|
| States Allowed | California focus; other states program dependent |
| Lien Position | 1st Position |
| Property Size | Five units or more |
| Loan Type | Apartment purchase, refinance, cash-out, or value-add |
| Loan Term | Varies by program; 5, 7, and 10 year structures common |
| Amortization | Commonly 30 years; interest-only periods program dependent |
| Recourse | Recourse and non-recourse both possible; property and size dependent |
| Qualifying Basis | Net operating income and debt service coverage ratio |
| Borrowing Entity | LLC, LP, or corporation standard |
| Property Types | Garden-style, mid-rise, high-rise, and residential-majority mixed-use |
| Third-Party Reports | Appraisal typical; environmental and property condition program dependent |
| Prepayment Penalty | Common; structure varies by program |
| Closing Time | Driven by third-party reports, rent roll quality, and file readiness |
WHO THIS IS FOR
Multifamily financing is commonly used by:
- Investors purchasing an apartment building of five units or more
- Owners refinancing an existing multifamily property to improve cash flow or access equity
- Investors acquiring a value-add property that needs renovation before it stabilizes
- Self-employed and portfolio investors who plan to qualify primarily on the property’s income
- Owners holding property in an LLC, LP, or corporation who need financing in the entity’s name
PROCESS OVERVIEW
Initial consultation and property review
Rent roll, trailing operating statements, and entity documents collected
Net operating income and debt service coverage reviewed
Preliminary structure and lender selection
Appraisal and any required third-party reports ordered
Underwriting, lender approval, documents, and close
Timelines vary by property and by how quickly the rent roll, operating statements, and third-party reports come together. Files move fastest when the property’s numbers are ready before the application. No specific timeline can be promised for any individual transaction.
Important Considerations
- The rent roll and operating history carry more weight than the borrower’s personal income
- Vacancy, delinquency, and below-market rents all reduce what a lender will size
- Value-add deals are underwritten to a stabilization plan, not to today’s income alone
- Prepayment structures are common and can be significant on an early sale or refinance
- Rent control and local ordinances affect both underwriting and the exit
- Two to four unit properties are a different loan entirely
Multifamily vs DSCR vs Commercial: Which Loan Fits the Building?
The unit count usually decides this before anything else does. Five units or more is a multifamily loan, underwritten on the building’s income. One to four units is residential, and an investor most often finances it with a DSCR loan. A commercial loan covers business-use property — office, retail, industrial, or the building a business operates from. The property decides, not the borrower.
| What matters to you | Multifamily loan | DSCR loan | Commercial loan |
|---|---|---|---|
| Property | Apartments, 5+ units | Residential 1–4 units | Office, retail, industrial, mixed-use |
| Qualifies mainly on | Net operating income and debt service coverage | The rental property’s income vs its payment | The building’s income plus the borrower’s profile |
| Documentation | Rent roll and trailing operating statements | Lease or market rent, light borrower documentation | Leases, financials, entity documents |
| Borrowing entity | LLC, LP, or corporation standard | LLC common, individual also fine | LLC or corporation routine |
| Non-recourse possible | Yes, on larger stabilized assets | Rarely | Sometimes, asset dependent |
| Value-add supported | Yes, structured to a stabilization plan | No, stabilized rentals | Sometimes, via bridge |
If your property sits right on the four-to-five unit line, that one unit changes the loan. Worth a conversation before an application goes anywhere.
Frequently Asked Questions
Those are typically financed under a different, more residential-style program rather than as multifamily commercial. Tell us about the property and we can point you to the right fit.
It depends on the property’s income, occupancy, and management, along with the lender and program. Larger, stabilized properties are more likely to qualify for non-recourse terms than smaller or newer-investor deals. Every scenario is reviewed individually.
Value-add and transitional financing is available for properties in that position. It is typically structured differently than a stabilized permanent loan, with the plan for stabilization factored into underwriting.
Yes. The loan structure, leverage, and recourse terms may look different than for an experienced owner with a larger portfolio.
DSCR stands for debt service coverage ratio. It measures how much income a property generates relative to its loan payment. Multifamily loans are typically sized around this ratio, which is why a property’s rent roll and operating history matter as much as, or more than, the borrower’s personal income.
Yes, and it is the norm on apartment deals. A personal guaranty from the principals may still be required depending on the lender, the size of the loan, and the property.
MULTIFAMILY LOAN EXAMPLE
An investor held a twelve-unit building in Long Beach that had been in the same family for decades. Rents were roughly twenty percent under market and four units needed work before they could be re-leased.
The file was structured as a value-add refinance sized to the stabilized rent roll rather than to the trailing twelve months, with a defined exit into permanent financing once the units were turned. The owner funded the renovation out of the proceeds instead of out of pocket.
Illustrative example. Not a loan offer, a rate quote, or a commitment to lend.
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Ready to Finance Your Apartment Property?
Work with a broker who compares lenders and sizes the loan around the rent roll — not generically.
Broker Advantage Statement
Not every multifamily program is the same. As a mortgage broker, Westpark Loans compares lenders to structure the right solution based on your property’s income, its condition, your entity, and how long you intend to hold it.