Philadelphia's small multifamily comes in two very different packages: century-old twins and Victorians in West Philadelphia and Germantown carved into apartments, and newer two-unit buildings in Fishtown, Kensington and Brewerytown built to rent from day one. Both qualify for DSCR loans, but taxes and zoning treat them differently.
In short: LendingStreet finances Philadelphia duplexes, triplexes and fourplexes with DSCR loans that qualify on the combined rent of all units, with no W-2s or tax returns. Loans start at $150,000, purchases go up to 80% LTV, the standard minimum DSCR is 1.0x and LLC borrowers are standard. In Philadelphia, check two things before you count every unit's rent: the zoning permit for the unit count, and when any tax abatement on a newer building ends.
In University City, Spruce Hill, Cedar Park, Walnut Hill and Garden Court, large late-1800s twins and Victorians were divided into two to four apartments, often decades ago. Germantown, Mount Airy and parts of Tioga and Strawberry Mansion have similar large homes. These buildings rent to students, hospital staff and young professionals and often sit near SEPTA trolley and El lines.
Since the 2000s, builders in Fishtown, Kensington, Northern Liberties, Brewerytown, parts of South Philadelphia and around Temple have put up new two-unit buildings, typically a lower unit and a bi-level upper unit with separate entrances. They are simpler to maintain and insure but come with higher prices.
Much of Philadelphia is zoned for single-family rowhomes or twins. Converting a single-family home into more units usually needs a zoning permit, and in many districts a variance from the Zoning Board of Adjustment. Multifamily districts allow more units by right.
Before you buy, look up the property's zoning and the use registration permit on file with the city. If the approved use is a single-family dwelling and the building has three apartments, the extra units may not count toward value or rent. Every unit also needs to be covered by the property's rental license.
Philadelphia has long offered a property tax abatement on new construction and improvements, which made many newer duplexes cheap to hold for their first years. The abatement was scaled back for projects permitted more recently. When it expires, the tax bill can jump to the full assessed value.
Ask for the abatement start date, how many years remain and the assessment on the improvements. Then test your DSCR both with the current bill and with the full bill, because the full bill is what you will pay for most of a 30-year loan.
This example is illustrative and not a quote. An investor buys a newer Fishtown duplex for $725,000, with two units leased at $2,450 each, or $4,900 a month. At 75% LTV the loan is $543,750, and estimated principal and interest on a 30-year loan is about $3,783.
With the abatement still in place, taxes are about $350 a month and insurance $180, so the payment is about $4,313 and DSCR about 1.14x. After the abatement ends, taxes rise to an estimated $846, the payment becomes about $4,809 and DSCR falls to about 1.02x, still just above the 1.0x standard minimum. If the post-abatement ratio had fallen short, a lower loan amount or a sub-1.0 DSCR program would be the fix.
A Spruce Hill triplex bought for $480,000 with three units at $1,450 is a different picture: a loan of $360,000, a total payment near $3,285 and DSCR about 1.32x.
| Item | Fishtown duplex, abated | Fishtown duplex, full tax | Spruce Hill triplex |
|---|---|---|---|
| Loan amount (75% LTV) | $543,750 | $543,750 | $360,000 |
| Combined monthly rent | $4,900 | $4,900 | $4,350 |
| Estimated principal and interest | $3,783 | $3,783 | $2,505 |
| Taxes | $350 | $846 | $560 |
| Insurance | $180 | $180 | $220 |
| Total monthly payment | $4,313 | $4,809 | $3,285 |
| DSCR | About 1.14x | About 1.02x | About 1.32x |
University City buildings rent to Penn and Drexel students and staff, and to workers at Penn Medicine and CHOP. Fishtown and Northern Liberties attract young professionals commuting to Center City. Germantown and Mount Airy draw longer-term tenants who want more space. Student buildings can turn over every year, while family tenants in the Northwest often stay longer.
Use signed leases or an appraiser's rent schedule specific to the building. Rents vary widely by condition, utilities included and outdoor space. A unit with central air, in-unit laundry and a roof deck in Fishtown rents in a different band from a dated third-floor walk-up in Cedar Park, and the appraiser will reflect that difference unit by unit rather than averaging across the building.
Converted twins and Victorians often have old boilers, slate or flat roofs, knob-and-tube wiring and lead paint. Insurance and maintenance reflect that. Flat rowhouse roofs and shared party walls are routine here but worth inspecting closely.
Philadelphia's realty transfer tax is also high compared with most of the country, which adds to cash to close on a purchase. Confirm the buyer and seller split in your agreement of sale.
Rate-and-term refinances go up to 80% LTV on some programs and cash-out refinances up to 75% LTV. Seasoning rules vary by program, and the combined rent must clear the minimum at the new payment, including the full tax bill if an abatement is ending soon.
Buildings of five to eight units, common among the larger West Philadelphia conversions, are covered on our Philadelphia 5-8 unit page.
Send the address, price or value, unit count, zoning and rental license details, leases and the tax bill with any abatement schedule. The financing team will run the ratio both ways and come back with options.
Our investor loans are business-purpose loans on non-owner-occupied property. Call (877) 298-1001 or use the form below to get a quote.
Yes, if the units are legal and the combined rent clears the program's DSCR requirement. Confirm the zoning and use permit match the unit count.
It lowers taxes for a set period. We look at the current bill, but you should also test the payment at full taxes, since that is your long-term cost.
The property needs a valid Philadelphia rental license that covers its units, plus lead certification where required for pre-1978 buildings.
Only after it is legally permitted. Unpermitted units usually get no value or rent credit.
$150,000. Most Philadelphia duplexes and triplexes are priced well above what that requires.
Yes. They are residential DSCR loans too, though max LTV can be lower. See our Philadelphia 5-8 unit page.
No. The loan qualifies on the property's rent, and LLC borrowers are standard.
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