The Full Landscape of Multifamily Financing in Florida
Florida investors have more financing options than most realize — and each serves a different investor profile, property type, and hold strategy. Understanding all options before approaching any lender prevents the common situation where an investor discovers their preferred loan structure is unavailable for their specific property or borrower profile after they're under contract.
Conventional Investment Property Loans (1–4 Units, Non-Owner-Occupied)
The most common financing structure for South Florida investors purchasing single-family, duplex, triplex, or quadplex investment properties without living in one unit:
- Down payment: 20% for single-family, 25% for 2–4 unit investment properties
- Credit score: 620 minimum; 680+ for better pricing; 740+ for best rate tier
- Rate premium: Investment property rates are typically 0.5–1.0% higher than primary residence rates for the same loan amount and credit profile
- Income documentation: Full personal income documentation required — W-2s, tax returns, pay stubs. For self-employed: 2 years of returns plus year-to-date P&L
- Rental income counting: Lenders will count 75% of rental income from the investment property toward qualifying income — but typically require a signed lease and sometimes a history of rent collection
- Max properties: Fannie Mae and Freddie Mac will finance up to 10 properties per borrower using conventional financing. Properties 5–10 have more stringent requirements
- Best for: Investors with strong W-2 or documented income, good credit, and capital for the larger down payment
DSCR Loans — The Game-Changer for Self-Employed and Portfolio Investors
Debt Service Coverage Ratio (DSCR) loans are one of the most important financing innovations for South Florida real estate investors in the past decade. Instead of qualifying based on your personal income, the loan qualifies based on the property's rental income relative to the debt service.
- How qualification works: The lender divides the property's gross rental income by the total monthly debt service (PITI). A DSCR of 1.25 means the property generates 125% of the payment — $1,250 in rent for every $1,000 in payment. Most South Florida DSCR lenders require 1.0–1.25 DSCR minimum
- Down payment: 20–25% typically
- Credit score: 640–680 minimum depending on lender
- No personal income documentation: No W-2, no tax returns, no employment verification. The property's income is the qualification. This makes DSCR ideal for self-employed investors, investors with complex tax situations, and portfolio investors with many properties
- Rate premium: DSCR rates are typically 0.5–1.5% higher than conventional investment rates — the lender is taking on more risk by relying on property income
- Rental income source: Most DSCR lenders use market rent (from an appraisal, not an existing lease) — which means you can qualify on a vacant property's projected rent
- Best for: Self-employed investors, portfolio investors who can't qualify conventionally due to depreciation reducing taxable income, and investors wanting to scale without documenting personal income on each deal
📊 DSCR Calculation — South Florida Example
Property: Homestead 3BR/2BA single-family · Market rent: $2,300/month
DSCR loan: $280,000 at 8% = $2,054/month P&I
Taxes: $460/month · Insurance: $500/month · Total PITI: $3,014/month
DSCR = $2,300 ÷ $3,014 = 0.76 — below the 1.0 minimum
To achieve 1.0 DSCR: either rent must be $3,014/month (above market) or the loan balance must be reduced to approximately $210,000 (requiring a larger down payment). This is why DSCR qualification requires realistic rent analysis before purchase.
FHA with Owner-Occupancy (2–4 Units)
The most accessible multifamily financing for investors willing to live in one unit. Covered in detail in the Duplex FHA Guide. Key facts:
- 3.5% down on 2–4 unit properties
- 580+ credit score (lenders often require 620+)
- Must occupy one unit as primary residence
- 75% of rental income from non-owner units counts toward qualifying income
- Available for properties up to $994,050 (2-unit) in Miami-Dade and Broward
- Can be stacked with Hometown Heroes ($35,000) and county DPA programs
Commercial Loans (5+ Units)
Once a property has 5 or more units, it exits residential lending and enters commercial financing territory. The rules change significantly:
- Loan structure: Typically 5–25 year terms, often with balloon payments, sometimes with interest-only periods. Not the 30-year fixed structure of residential loans
- Qualification: Based primarily on the property's NOI and DSCR, with personal guaranty required in most cases
- Down payment: 20–35% depending on property type and lender
- Recourse vs. non-recourse: Most small commercial loans are full-recourse (your personal assets are at risk). Non-recourse loans are available at larger loan amounts and better properties
- Lenders: Community banks, credit unions, and commercial mortgage brokers — not the same lenders who handle residential loans
- Best for: Experienced investors acquiring apartment buildings (5–20 units) as their portfolio scales beyond single-family and small multi-family
Hard Money and Bridge Loans
Free · No Credit Check · 2 Minutes
Wondering What Programs You May Qualify For?
Answer a few simple questions and discover homebuyer programs, financing options, grants, and next steps — tailored to your South Florida situation.
Take The Homebuyer Qualification Quiz ›- Hard money: Asset-based short-term financing (6–24 months) at 10–15% interest rates. Qualifies based on property value and equity, not borrower income. Used for BRRRR acquisitions and renovations when the property doesn't qualify for conventional or DSCR financing in its current condition
- Bridge loans: Short-term financing to bridge from purchase to stabilization (rented and income-producing). Lower rates than hard money (7–10%) for stronger borrower profiles. Used when the property is partially occupied or undergoing light renovation
- Exit strategy required: Hard money and bridge loans must be refinanced into permanent financing once the property is stabilized. Underwriting your permanent loan structure before taking hard money is essential — don't enter a hard money deal without knowing your refinance exit
Rate and Cost Comparison — South Florida 2026
| Loan Type | Typical Rate (2026) | Down Payment | Income Docs | Best Use Case |
|---|---|---|---|---|
| Conventional (invest.) | 7.0–8.0% | 20–25% | Full W-2/returns | W-2 investors, good credit |
| DSCR | 7.5–9.0% | 20–25% | None | Self-employed, portfolio investors |
| FHA (owner-occ, 2–4 unit) | 6.5–7.5% | 3.5% | Full docs | First-time investor / house hack |
| Commercial (5+ unit) | 6.5–8.5% | 20–35% | Property NOI | Apartment buildings |
| Hard money | 10–15% | 20–30% equity | Minimal | BRRRR acquisition + renovation |
Frequently Asked Questions
What is a DSCR loan and how does it work in Florida?
A DSCR (Debt Service Coverage Ratio) loan qualifies based on the property's rental income rather than your personal income. The lender divides the gross rental income by the total monthly payment (PITI). Most South Florida DSCR lenders require a ratio of 1.0–1.25, meaning the rent must equal or exceed 100–125% of the payment. No W-2, no tax returns, no employment documentation required — making DSCR the preferred structure for self-employed investors and those whose tax returns show low income due to real estate depreciation.
How much down payment do I need for a multifamily investment in Florida?
For conventional non-owner-occupied financing: 20% for single-family, 25% for 2–4 unit properties. For DSCR: 20–25%. For FHA with owner-occupancy: 3.5% (and eligible for DPA programs). For commercial loans on 5+ units: 20–35% depending on lender and property. The FHA owner-occupancy duplex option is by far the lowest capital entry point into South Florida multifamily.
Can I get a multifamily loan with bad credit in Florida?
With a DSCR loan, credit score requirements are lower than conventional — 640–680 minimum at most South Florida DSCR lenders, with the property's income being the primary qualification factor. Hard money lenders focus primarily on property value and equity — credit score is less critical, though rates increase with lower credit profiles. FHA (for owner-occupied 2–4 unit) requires 580+ but many lenders impose 620+ overlays.
What is the difference between residential and commercial multifamily financing?
Residential multifamily financing (Fannie/Freddie/FHA) covers 1–4 unit properties with 30-year fixed terms, personal income qualification, and standard mortgage structures. Commercial multifamily (5+ units) uses different underwriting (NOI-based), different loan structures (5–25 year terms, balloon payments common), different lenders (banks, credit unions, commercial mortgage brokers), and different regulatory frameworks. The shift from 4 units to 5 units is one of the most significant threshold changes in real estate investment financing.
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