Multifamily loan down payment runs 13–35% depending on the program. FHA 223(f) goes lowest at 13% down (87% LTV) but takes 6–9 months to close. Fannie Mae and Freddie Mac multifamily programs require 20–25% down (75–80% LTV) on stabilized 5+ unit properties. Bank balance-sheet loans typically need 25–30% down. Bridge financing for value-add or non-stabilized deals runs 25–35% down at 9–13% rates. The true sizing constraint is rarely the LTV cap — it's the 1.20–1.25 DSCR minimum on the property's NOI.
The multifamily down payment question is the first concrete number every new investor and most repeat sponsors want to know. The honest answer is that it depends entirely on which loan program you use and whether the property is stabilized — the spread between the best and worst case is more than 2x. This guide breaks down what you actually need by program, why DSCR usually matters more than LTV, and the equity sources that count beyond your own cash. For the broader product view see commercial real estate loans and the general CRE down payment guide for property types beyond multifamily.
Down Payment by Loan Program
| Program | Max LTV | Down payment | Rate | Close time |
|---|---|---|---|---|
| FHA 223(f) refinance/acquisition | 87% | 13% | ~6–7% | 6–9 mo |
| Fannie Mae DUS | 80% | 20% | 6.5–7.5% | 60–90 d |
| Freddie Mac Optigo SBL | 80% | 20% | 6.5–7.5% | 45–60 d |
| Bank balance-sheet (regional) | 70–75% | 25–30% | 7–8.5% | 45–75 d |
| CMBS | 70–75% | 25–30% | 6.5–8% | 60–90 d |
| Bridge (value-add) | 65–75% | 25–35% | 9–13% | 14–30 d |
The right program depends on three things: property condition (stabilized vs value-add), deal size ($1M small balance vs $10M+ large), and your time horizon (5-year hold vs flip in 18 months). FHA wins on lowest down but you pay for it with the timeline; bridge wins on speed but you pay for it with rate.
Down Payment by Property Type
Within multifamily, sub-property-type drives small adjustments to the down payment math:
- Garden-style stabilized 5–30 units: 20–25% down typical. Best programs: Fannie/Freddie small balance, regional banks.
- Mid-rise 30–100 units: 20–25% down. Fannie DUS, Freddie Optigo, larger banks.
- Large 100+ units: 25–30% down typically. Agency (DUS/Optigo), CMBS, or life-company debt.
- Student housing: 25–30% down. Lenders haircut NOI for seasonal vacancy.
- Senior housing / assisted living: 25–35% down. Treated more like operating businesses than pure RE; HUD 232 program is the FHA equivalent for skilled nursing.
- Affordable / LIHTC properties: Often 0–10% sponsor equity due to tax credit and soft debt; the down-payment math is fundamentally different.
- Manufactured housing parks: 25–30% down. Specialty lenders dominate; agency programs (Fannie/Freddie MHC) require park ownership of pads + community.
Why DSCR Usually Matters More Than LTV
Most new investors fixate on the 75–80% LTV cap and assume that means they need 20–25% down. In practice, the binding constraint on multifamily loan size is usually debt service coverage ratio (DSCR), not LTV.
How it works: the lender calculates max loan size two ways and uses whichever is smaller.
- LTV approach: max loan = appraised value × 75–80%. Simple, just an appraisal-based cap.
- DSCR approach: max loan = (NOI ÷ minimum DSCR) ÷ debt constant. The debt constant is roughly the annual payment per $1 of loan at the loan's rate and amortization.
Example: $5M appraised value, $300K NOI, 7% rate, 30-yr amort. Debt constant ~0.08 (annual payment ~8% of loan amount). DSCR approach gives max loan = ($300K ÷ 1.25) ÷ 0.08 = $3M. LTV approach gives max loan = $5M × 0.75 = $3.75M. The DSCR-based $3M wins. Your real down payment = $5M − $3M = $2M = 40% down, not the 25% you would expect from LTV alone.
This is why two identical-priced multifamily deals can require very different equity. The one with stronger in-place NOI (better rents, lower expenses) lets you finance more; the one with weak NOI forces more equity in. Sponsors who pencil deals only on LTV often get a nasty surprise at term sheet.
Equity Sources Beyond Your Cash
If you can't write the down payment check from your own balance sheet, there are five common ways to fill the gap:
- 1031 exchange proceeds. Sell another investment property, defer the capital gains tax, roll the proceeds into the multifamily down payment within 180 days. Has to be like-kind; most CRE qualifies as like-kind to multifamily.
- Seller carry-back note. Many private sellers (especially aging owners or estates) will carry 5–15% of the purchase price on a second-position note. Reduces your cash down by the same amount; senior lender has to approve subordination.
- Mezzanine debt. A second-position loan that fills the gap between senior debt (say 75% LTV) and your equity (say 10% cash). Mezz typically costs 10–15% and is structured as either a true second loan or a preferred equity position. Common on $5M+ deals.
- Syndication / LP capital. Raise 70–95% of the equity from limited partners (passive investors) and keep the GP position. Standard structures include 8% preferred return + 70/30 promote, 80/20, etc. Forms a fund or single-asset LLC.
- Preferred equity. Similar to mezz but structured as equity rather than debt. Slightly cheaper (8–12%) but takes the second loss position rather than getting interest-only debt service.
The right stack depends on deal size, your appetite for partners, and how the senior lender views the subordinate capital. Most banks and agency lenders will allow some but not all of these; the specific limits go in the term sheet.
Reserves and True Out-of-Pocket
The down payment number is not your total out-of-pocket. At close, multifamily lenders typically want:
- 3–6 months of debt service in reserves — funded at close, held in lender-controlled escrow.
- Replacement reserves — usually $250–$400 per unit per year, funded ongoing from operations but may require an upfront deposit.
- Tax and insurance escrow — funded at close (often 2–6 months of T&I).
- Closing costs — appraisal ($2–$5K), Phase I environmental ($3–$6K), title insurance (0.5–1% of loan), lender legal ($5–$25K), origination/exit fees (0.5–1.5% of loan), survey, etc. Total typically 2–3% of loan amount.
For a $4M loan, expect $80–$120K in closing costs and $60–$120K in reserves on top of your down payment. Build the full number into your pro forma before signing.
How to Lower Multifamily Down Payment
- Use FHA 223(f) if the deal qualifies. 13% down vs 25% is the biggest single lever. Trade-off: 6–9 month close, HUD's extensive requirements, and prepayment restrictions.
- Add a seller carry-back. Reduces your cash down 1:1 with whatever the seller will carry. Make sure your senior lender approves before signing the purchase agreement.
- Improve in-place NOI before applying. Pushing rents to market, trimming expenses, or chasing delinquencies before underwriting lets the property carry more debt at the DSCR test — literally less down payment for the same purchase price.
- Use a syndication structure. If you can raise LP equity, your check size drops to whatever sponsor equity you commit (typically 5–10% of the total equity raise).
- Look at smaller deals. Sub-$1M properties using residential-style portfolio lenders or local credit unions can run 15–20% down with lighter underwriting than agency.
Next Step
Get matched with multifamily lenders — one application, multiple offers across Fannie, Freddie, FHA, bank, and bridge programs sized to your deal. For the broader context see commercial real estate loans or the general CRE down payment guide.