A loan on an apartment building of five or more units that falls under a size cap. Each program sets its own cap, so the phrase has no single legal meaning.
The term describes loan size, not building size. Fannie Mae’s Multifamily Guide defines a Small Mortgage Loan as one with an original amount of $9 million or less. Freddie Mac’s small loan term sheet covers loans of $10 million or less, generally $2 million to $10 million, mostly on market-rate buildings of 5 to 50 units. Banks and credit unions set their own cutoffs and often have none at all: a $900,000 loan on an eight-unit building is simply a commercial real estate loan to them.
The size matters because it decides which programs and which lenders will look at the deal. A loan under a program’s cap can use that program’s small loan rules, and a community bank or credit union that keeps loans on its own books sets its own. What stays the same is the core package: a current rent roll, twelve months of operating history, and a personal financial statement from each guarantor.
When you screen lenders, look at the size of the multifamily loans a lender actually made, not at its marketing.
How it shows up in the data here
No field carries this label. HMDA shows each lender's median and largest multifamily loan for 2025 and 2024, which tells you whether small loans are its normal business. Start with multifamily lenders or the ranking by number of loans made. The small-balance flag on this site covers commercial property loans of $1 million or less, not apartments.
Go further
- Multifamily lenders by loans made: Lenders ranked by how many multifamily loans they made, from HMDA.
- Multifamily loan comps: Loan size, rate and term on recent multifamily loans.
- DSCR calculator: Cash flow over debt service. Type the cash flow and the loan terms, see the ratio and the cushion before it falls to 1.00x.
- Maximum loan calculator: The loan each test allows: DSCR, LTV and debt yield side by side, and which one binds.
- Small balance multifamily loan checklist: Most apartment loans are small. Local banks, credit unions and the agencies' small loan programs all compete for them, and each wants the same core package with a different emphasis.
- Multifamily loan checklist for 5+ unit properties: A larger apartment loan can go to five kinds of lender. They want much the same package. They differ on recourse, term, prepayment, speed and what they ask of the sponsor.
Related terms
- Multifamily (5+ units): Residential rental property with five or more units. Banks, credit unions and HMDA all draw the line between four units and five.
- Freddie Mac Small Balance Loan (SBL): Freddie Mac's fixed-rate program for apartment loans of $10 million or less, delivered through its Optigo lenders. Freddie Mac now titles it Conventional Small.
- Agency lender: A lender authorized to make apartment loans that Fannie Mae or Freddie Mac then buys or backs, under those companies' rules instead of the lender's own.
- DUS (Delegated Underwriting and Servicing): Fannie Mae's multifamily program, in which authorized lenders underwrite, close and service apartment loans under Fannie Mae's guide and keep a share of any loss.
- Optigo: Freddie Mac's name for its multifamily loan products and for the network of lenders it buys those apartment loans from.
- Portfolio lender: A portfolio lender is a lender that keeps the loans it makes on its own books instead of selling them to an investor.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.