In New York City, the jump from a three-family to a four-family is bigger than one apartment. It moves the building into a different property tax class, and that can change the numbers more than the extra rent does.
In short: LendingStreet finances New York City two-, three- and four-family rentals with DSCR loans that qualify on the combined rent of all legal units, with no W-2s or tax returns and LLC borrowers allowed. Loans start at $150,000, purchases go up to 80% LTV and cash-out refinances up to 75% LTV, with a 1.0x standard minimum DSCR. Check the certificate of occupancy and the tax class first: one- to three-family homes are in tax Class 1, while four-unit buildings fall in Class 2.
Two-family homes are everywhere outside Manhattan. In Queens, brick two-families fill Jamaica, Ozone Park, Richmond Hill, South Ozone Park, Corona and East Elmhurst. In Brooklyn, East Flatbush, Flatbush, Canarsie, Midwood and Bensonhurst have frame and brick two-families, and Bed-Stuy, Crown Heights and Bushwick have brownstones and row houses with two or three units. The Bronx has frame two- and three-families in Wakefield, Williamsbridge, Eastchester and Throgs Neck. Staten Island has semi-attached and detached two-families across many neighborhoods.
Three-families are common in the Bronx, in Ridgewood and Glendale in Queens, and in parts of Brooklyn. True four-family buildings are less common and are often brick walk-ups.
| Building | Property tax class | Assessment ratio | Typical areas |
|---|---|---|---|
| Two-family | Class 1 | 6% assessment ratio, with caps on annual increases | Queens, Brooklyn, Bronx, Staten Island |
| Three-family | Class 1 | 6% assessment ratio, with caps on annual increases | Bronx, Ridgewood, Brooklyn row houses |
| Four-family | Class 2 (small building) | 45% assessment ratio, with its own caps | Brick walk-ups in Brooklyn, Queens, Bronx |
The certificate of occupancy (C of O) on file with the Department of Buildings states how many legal dwelling units a building has. A house sold as a two-family with a basement apartment may legally be a one-family with an extra illegal unit, and only legal units count toward DSCR. Older buildings built before C of Os were required may rely on other records.
Check the C of O, the Department of Buildings and HPD violation records and the tax class before you sign. A mismatch between the listing and the records is common.
This example is illustrative and not a quote. An investor buys a three-family in Williamsbridge for $1,050,000. The units rent for $2,600, $2,500 and $2,300, a combined $7,400 a month.
As a Class 1 building, taxes are budgeted at $650 a month, and insurance at $350. At 75% LTV, the loan is $787,500 and estimated principal and interest is about $5,506, for a total payment of about $6,506 and DSCR of about 1.14x.
At 70% LTV, the loan is $735,000, the payment about $6,139 and DSCR about 1.21x. Either works; the investor also budgets the mortgage recording tax, roughly 2% of the loan amount, as a closing cost.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Loan amount | $787,500 | $735,000 |
| Estimated principal and interest | $5,506 | $5,139 |
| Taxes (Class 1) | $650 | $650 |
| Insurance | $350 | $350 |
| Total payment | $6,506 | $6,139 |
| Combined rent (3 units) | $7,400 | $7,400 |
| DSCR | About 1.14x | About 1.21x |
Class 1 covers one- to three-family homes, with a 6% assessment ratio and limits on how fast assessed value can rise each year. Buildings with four or more units are in Class 2, with a 45% assessment ratio; small Class 2 buildings also have caps on increases, but the starting bill is often much higher relative to value. Compare actual tax bills when you weigh a three-family against a four-family.
Water and sewer charges are billed separately and are usually paid by the owner in small buildings. They are not part of DSCR, but they come out of the same rent.
Rent stabilization generally applies to buildings with six or more units built before 1974, so most two- to four-family buildings are not stabilized. A building's history matters, though, so check the registration records. State law passed in 2024 added good cause eviction protections in the city, with certain exemptions, including some for small landlords. Have counsel review how they apply.
If you buy with tenants in place, the existing leases and rents are what the appraiser will consider. Do not assume large increases on renewal. Vacant units are valued on market rent, which the appraiser will support with recent leases in similar buildings nearby, so delivering a building with one or two vacant, renovated units can help the rent figure used for the loan.
New York City and State charge a mortgage recording tax on new mortgage debt, roughly 2% of the loan amount on one- to three-family homes and higher on other property types. Sellers usually pay the city and state transfer taxes, and buyers of one- to three-family homes at $1M or more pay the state mansion tax. On a refinance, a CEMA may reduce recording tax by carrying over the existing mortgage balance.
Many two- and three-families date from the 1920s through the 1960s. Common issues include older boilers, galvanized plumbing, outdated electrical service and facade or parapet repairs. Open violations can complicate a closing, so ask for a violations search early.
If a building needs substantial work, a bridge or fix and flip loan can come first, with a DSCR refinance once the units are leased. Budget for permit timelines and sign-offs, which can stretch a renovation in the city well beyond the construction work itself.
Walk-ups with five to eight units are still residential for DSCR purposes, though maximum LTV can be lower and varies by program, and some may be rent stabilized. See our NYC 5-8 unit page. Nine or more units is commercial financing.
Our investor loans are business-purpose loans on non-owner-occupied property. Send the address, the C of O, rents and tax bill through the form below or call (877) 298-1001. For statewide guidance, see our New York 2-4 unit page.
Yes. One- to three-family homes are tax Class 1 with a 6% assessment ratio, while four-unit buildings are Class 2 with a 45% assessment ratio.
Only if it is a legal unit on the certificate of occupancy.
Generally not, since stabilization usually applies to buildings with six or more units built before 1974. Check the building's records.
A tax on new mortgage debt, roughly 2% of the loan amount on one- to three-family homes and higher on other property types.
It may, by carrying over the existing mortgage balance so tax is paid only on new money.
Buyers of one- to three-family homes at $1M or more generally pay it. Confirm with your attorney.
No. City law bars investor-owned whole-unit rentals under 30 days.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
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