The short answer
A small balance multifamily package is a rent roll, a trailing twelve months of income and expenses, two or three years of operating history, tax and insurance bills, the sponsor's financial statement and schedule of real estate owned, and entity documents. Banks and credit unions lend on these with recourse and keep the loan. Agency small loan programs are generally non-recourse with standard carve-outs and want standard documents.
Where small apartment loans come from
In the 2025 HMDA file there were 43,226 HMDA, multifamily loans. Of the 41,516 this site can show by size, 43% HMDA, were under $1 million and 79% were under $5 million. The middle loan was $1,200,000.
Three kinds of lender make most of them.
- Banks. They lend from their own balance sheet and keep the loan. They usually want a deposit relationship and a personal guaranty. Lenders that keep their loans are called portfolio lenders.
- Credit unions. A loan on five or more units is a commercial loan under NCUA’s rule, so it counts toward the credit union’s business loan limits, and the borrower must be a member. See placing a business loan with a credit union.
- Agency small loan programs. Fannie Mae and Freddie Mac buy small multifamily loans from lenders they have chosen. Freddie Mac’s Conventional Small term sheet describes loans “of $10 million or less,” generally $2 million to $10 million, on “predominantly market-rate properties of 5 to 50 units.”
Each has a different idea of a good loan. A bank is lending to you and taking the building as collateral. An agency program is lending on the building and taking limited recourse to you.
What 2025 filings show by loan size
| Loan size | Loans | Share | Middle rate | Middle LTV | Refinances |
|---|---|---|---|---|---|
| Under $1 million | 17,878 | 43% | 7.01% | 66% | 45% |
| $1 million to $2.5 million | 9,900 | 24% | 6.38% | 63% | 51% |
| $2.5 million to $5 million | 4,947 | 12% | 6.17% | 63% | 54% |
| $5 million to $10 million | 3,267 | 8% | 5.97% | 65% | 56% |
| $10 million to $25 million | 2,905 | 7% | 5.75% | 65% | 54% |
| $25 million and over | 2,619 | 6% | 5.45% | 64% | 53% |
HMDA, Five or more units, manufactured-home parks left out. Rate and LTV are as filed under HMDA; a loan that reported none is left out of that median.
The table’s counts add to the 41,516 loans shown by size, not to the full count for the year.
Read the first row against the others. Loans under $1 million carried the highest middle rate, and the middle rate falls in each larger band. Loan to value hardly changes from band to band. The middle loan to value across all sizes was 65%, and the middle term was 10 years.
Three cautions. These are loans made across a whole year by every kind of lender, so the rate column mixes months and lender types. A loan that reported no rate is left out of the middle, and smaller banks and credit unions are the ones allowed to leave it blank. And a middle is a middle: half the loans in a band were above it.
The package
Property
- Current rent roll: unit, bedrooms, square feet, tenant, lease start and end, rent, deposit, and any balance owed
- Trailing twelve months of income and expenses, month by month
- Year-end operating statements for the last two or three years
- Real estate tax bills, current and prior year
- Insurance declarations and the current premium
- Twelve months of utility bills for any utility the owner pays
- A list of capital work done in the last three years, with cost, and work planned
- Leases, or a sample with the standard form
- Photographs, exterior and a sample of units
- For a purchase: the contract and the seller’s operating statements
- For a refinance: the current note, payoff figure and original closing statement
On a small building the tax returns for the property often stand in for formal operating statements. If the building is in your own name, the lender will read Schedule E.
Sponsor
- Personal financial statement for each guarantor or key principal
- Two or three years of personal federal tax returns
- Schedule of real estate owned, with values, loans, lenders, payments and net income
- Bank and brokerage statements showing cash for the down payment, costs and reserves
- A short record of rental property owned and how it is managed
- Entity documents, an ownership chart and a certificate of good standing
What the lender orders
An appraisal, and usually an environmental screen or Phase I, a property condition review and title work. Under 12 CFR 323.3 a loan on five or more units is a commercial real estate transaction, so a bank loan above $500,000 needs an appraisal by a state certified or licensed appraiser, and a loan at or under that amount needs at least an evaluation.
Looking for a lender now? Find lenders for this in your state or see Multifamily lenders state by state.
How the lender builds the number
Rent in place, less an allowance for vacancy and collection loss, less operating expenses, less a management fee and replacement reserves whether or not you pay them. The result is net operating income. The loan is the smaller of what the coverage test and the loan to value test allow.
Small buildings have a pattern lenders know: the owner manages, does some repairs personally and books no cost for either. The lender will add a management fee and a repair figure. Do that yourself first, so your number and the lender’s start close together.
Worked example (hypothetical). A 12-unit building collects $14,400 a month when full, or $172,800 a year. The owner’s statement shows expenses of $60,000 and no management fee.
Underwritten income. Take 5 percent off for vacancy: $172,800 less $8,640 is $164,160.
Underwritten expenses. $60,000, plus a management fee of 5 percent of collected income ($8,208), plus reserves of $300 a unit ($3,600). That is $71,808.
NOI. $164,160 less $71,808 is $92,352. The owner’s own figure was $112,800 ($172,800 less $60,000).
Loan by coverage. At a 1.25 coverage test, payments can be $73,882 a year ($92,352 divided by 1.25). At 7 percent on a 25-year schedule, $1,000,000 of loan costs about $84,800 a year, so the loan is about $871,000.
Loan by value. If the building appraises at $1,250,000 and the limit is 75 percent, the loan is $937,500. Coverage binds, at about $871,000.
The vacancy, fee, reserve, coverage and loan to value figures are this example’s assumptions. They are not any lender’s terms.
Run your own numbers in the maximum loan calculator.
Bank or credit union, or an agency program
How the choices differ
| Question | Bank or credit union | Freddie Mac Conventional Small (term sheet dated 4/26) |
|---|---|---|
| Loan size | Set by the lender’s limit to one borrower and its policy | Generally $2 million to $10 million |
| Property | Lender’s policy | Predominantly market-rate properties of 5 to 50 units, with listed exclusions |
| Recourse | Usually a personal guaranty | Non-recourse except for standard carve-out provisions |
| Term | Lender’s policy | 5, 7, 10, 12 or 15-year terms |
| Amortization | Lender’s policy | Maximum 30 years |
| Coverage and loan to value | Lender’s policy, not published | Minimum amortizing coverage of 1.25x. Maximum loan to value of 80 percent for amortizing loans with terms of 7 years or more, and 75 percent for shorter terms |
| Prepayment | Often a step-down or none | Yield maintenance, then defeasance, with other options at added cost |
| Borrower | Individual or entity | A single purpose entity, with limited exceptions |
| Escrows and reserves | Varies | Tax and insurance escrow and replacement reserve deposit generally required |
The right-hand column is from one Freddie Mac term sheet, which says its terms “are subject to change without notice” and that Freddie Mac sets credit parameters for each transaction. Fannie Mae has a small loan program of its own. Its current terms were not opened for this guide, so none are stated here. Ask an agency lender for both.
In plain terms: the agency route asks for a cleaner property, a borrowing entity set up for the purpose and standard documents, and gives limited recourse and a long fixed rate. A bank or credit union is more flexible about the building and the borrower, quicker to change terms later, and wants your guaranty. See guarantor strength and recourse.
Finding lenders
For this loan the public record is unusually good. HMDA lists multifamily loans by lender, county, amount and year. Loan Comps reads it for a state and a size. Bank call reports and credit union filings add the balance each lender holds, which catches lenders too small to report under HMDA.
Want a person to check the public record for a small apartment loan? Request financing from The Lender Report’s operator. A person replies by email, usually naming lenders that have made loans like yours. It is free, it covers business and investment property loans only, and nothing is sent to a lender.
What the public record can and cannot tell you
It can: name lenders that made apartment loans near your size in your state last year, with the rate and loan to value where they were filed, and show which banks and credit unions hold multifamily loans.
It cannot: show today’s rates, a lender’s policy limits, whether a loan had recourse, or whether a lender is still adding these loans. A filed rate from last year is not a quote.
Questions to put to the lender
- Do you keep this loan or sell it?
- Is it full recourse, and to whom?
- What vacancy, management fee and reserve do you underwrite on a building this size?
- Is the rate fixed for the whole term, and what does it cost to prepay?
- Do you need the building in a single purpose entity?
Terms used here
- Small-balance multifamily: 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.
- 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.
- Rent roll: A list of every unit or space in a property showing the tenant, the rent, the lease dates and what is vacant, as of a stated date.
- T-12 (trailing 12 months): A property's income and expense statement for the most recent twelve months, usually shown month by month.
- Net operating income (NOI): A property's annual income minus its operating expenses, before loan payments, income taxes and depreciation. It is the top number in DSCR and debt yield.
- Replacement reserves: Money set aside, or an expense assumed by the lender, for periodic replacement of capital items such as roofs, heating and cooling systems and parking lots.
- 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.
- Optigo: Freddie Mac's name for its multifamily loan products and for the network of lenders it buys those apartment loans from.
- 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.
- 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.
- Non-recourse loan: A loan the lender can collect only from the property pledged for it, not from the guarantor personally, except for listed bad acts.
- Carve-out guaranty: A guaranty on a non-recourse loan that makes the guarantor personally liable only if the borrower commits listed acts, such as fraud or a voluntary bankruptcy.
- Debt service coverage ratio (DSCR): Net operating income, or business cash flow, divided by the loan payments due in a year. It shows how many dollars come in for each dollar of debt service.
- Loan-to-value ratio (LTV): The loan amount divided by the value of the property securing it. A $700,000 loan on a property valued at $1,000,000 is 70 percent loan to value.
Sources
Every rule and outside figure above comes from one of these, opened on . Dates are the source's own. Figures from this site's data carry their own source and date beside them.
- Freddie Mac Multifamily, Optigo Conventional Small term sheet (dated 4/26), retrieved .
- 12 CFR 1003.2 and 1003.3, Regulation C (multifamily dwelling; partial exemption), retrieved .
- 12 CFR 323.3, Appraisals required (FDIC), retrieved .
- 12 CFR 723.2, Member business loans, definitions (NCUA): 1- to 4-family property excluded from commercial loans, retrieved .
Next step: check the record
- Loan Comps for a small apartment loanLenders that made multifamily loans near this size in a state, from HMDA, with rate and loan to value where filed.
- Lenders for small balance commercial real estateBanks whose commercial property loans are mostly $1 million or less, and credit unions with small average loans.
- Lenders by multifamily loans madeCounted from the 2025 HMDA file. Loans made, not balances held.
Keep reading
- 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.
- LTV and LTC calculator: Loan to value and loan to cost, the equity a lender will ask for, and the federal supervisory limit for the property type.
- Maximum loan calculator: The loan each test allows: DSCR, LTV and debt yield side by side, and which one binds.
- Amortization and balloon calculator: Payment, balance at maturity and interest paid, for a loan that amortizes over longer than it runs.
- Deal summary builder: Turn the facts of a deal into a clean one-page summary you can copy or print. Nothing is saved or sent.
- 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.
- How to read HMDA data for multifamily and investor loans: HMDA is the one public file that lists individual apartment and rental-house loans by lender, amount, county and year. It covers loans on dwellings only, and not every lender reports.
- How bankers evaluate a commercial loan deal: A credit officer asks one question five ways: how will this loan be repaid, and what happens if it is not? Knowing the five tests lets you size a request before you send it.
- Guarantor strength and recourse, explained: A guaranty is the lender's second way out. Whether you sign one, how much it covers and what the lender checks before accepting it shape a commercial loan as much as the rate does.
- How to place a business loan with a credit union: Credit unions make business loans, and some make a lot of them. Three things are different from a bank: the borrower must be a member, most credit unions work under a cap on business loans, and the limit to one borrower is set against net worth.
- What a lender-ready loan package looks like: A lender decides in minutes whether to keep reading. A package that answers the first five questions on one page, and backs each answer with a document, gets read.
- Investor commercial real estate loan checklist: On an investor property the rent pays the loan. The package is the evidence for the rent: who pays it, for how long, what it costs to collect, and who stands behind the borrower if it stops.
Questions people ask
How small is small balance?
There is no single definition. In the 2025 HMDA file the largest group of multifamily loans was under $1 million. Freddie Mac's Conventional Small term sheet, dated April 2026, describes loans of $10 million or less, generally $2 million to $10 million, on properties of 5 to 50 units. Banks and credit unions make most of the loans below that.
Is a four-unit building multifamily?
Not for these purposes. HMDA, the call report and NCUA's commercial lending rule all draw the line at five units. A building of one to four units is residential, and is financed and reported differently.
Will a small bank's apartment loans show up in HMDA?
Only if the bank is a HMDA reporter. And a bank or credit union that made fewer than 500 covered closed-end loans in each of the two preceding years need not report the rate, term or loan to value, so those fields can be blank.
Cite this
Source: The Lender Report, Small balance multifamily loan checklist, https://lender.report/guides/package-checklist-small-balance-multifamily/, data as of November 11, 2026.
General information, not legal, tax or credit advice. A lender's own policy decides what it will do; ask it for the policy in writing.
Source and date appear beside each figure. Banks report balances, not loans made. Loans made come only from HMDA and SBA files. We do not audit filings and can make errors joining them. Report a problem