San Francisco's small multifamily stock is mostly stacked flats: two or three full-floor units in an Edwardian or Victorian building, often with a garage below. These buildings are some of the most traded rentals in the city, and they are financed very differently from a suburban duplex.
In short: LendingStreet offers DSCR loans for San Francisco duplexes, triplexes and fourplexes that qualify on the combined rent of all units, with no W-2s or tax returns and LLC borrowers standard. Loans start at $150,000 with no stated maximum and purchases go up to 80% LTV on some programs. In practice, San Francisco prices relative to rent, plus rent-controlled units, mean most two-flats and three-flats need lower leverage to reach a 1.0x DSCR.
Walk the Mission, Noe Valley, the Inner Richmond, Duboce Triangle, the Haight or Bernal Heights and you will see rows of two-flat and three-flat buildings from the early 1900s. Each unit usually takes a full floor with its own entrance. Fourplexes and mid-century boxy buildings are more common in the Richmond, the Sunset and Ingleside.
Many buildings have had a garage or ground-floor space converted into an accessory unit. That can add rent, but underwriters will ask whether the unit was permitted.
Much of the city's residential land is zoned RH-2 or RH-3, which allow two or three units per lot, while RM districts allow more. State laws on accessory dwelling units and lot splits, plus recent city rezoning efforts, have widened what can be added. Confirm the legal unit count with the Planning Department and the building's records before you buy.
A building marketed as a fourplex but legally a two-unit with two unpermitted units will usually be underwritten on the legal units only.
If you plan to add a legal unit after closing, the loan is sized on the building as it stands today. Once the new unit is finished, permitted and leased, a refinance can capture the added rent. Some investors use a bridge loan for the conversion period and then move into a DSCR loan.
Most two-to-four unit buildings built before mid-1979 are covered by the city's rent ordinance, which caps annual increases for existing tenants and limits evictions. A long-term tenant may pay far below market. Buildings built later are generally exempt from price limits but not from all tenant protections.
For DSCR purposes, an occupied unit counts at the rent in its lease. A vacant unit can count at market rent supported by the appraisal. A building with one long-term tenant and one market-rate unit is a very common San Francisco profile.
Ask the seller for estoppel letters or signed rent statements from each tenant, plus any rent board petitions or buyout agreements on file. Surprises in the rent roll are the most common reason a San Francisco 2-4 unit loan gets resized late in the process.
This example is illustrative and not a quote. An investor buys a two-flat for $1,700,000. The upper unit rents at market for $4,500 a month and the lower unit has a long-term tenant at $3,100 under rent control, for combined rent of $7,600. Taxes are estimated at about 1.18% of the price after reassessment, and insurance at $275 a month.
At 55% of the price the DSCR is only about 0.91x. At 50% it is about 0.98x. At 45%, a loan of $765,000 with estimated principal and interest of $5,219 produces a DSCR of about 1.06x. That is the realistic structure for many San Francisco flats: more cash in, or a sub-1.0 DSCR program.
| LTV | Loan amount | Est. principal and interest | Total monthly | DSCR |
|---|---|---|---|---|
| 55% | $935,000 | $6,378 | $8,325 | 0.91x |
| 50% | $850,000 | $5,798 | $7,745 | 0.98x |
| 45% | $765,000 | $5,219 | $7,165 | 1.06x |
Property is reassessed at purchase under Prop 13, so a new buyer's tax bill is roughly 1% of the price plus voter-approved local charges. San Francisco also has a tiered transfer tax that rises with sale price; who pays it is negotiated, so check your contract.
Insurance for older wood-frame buildings can be higher than buyers expect, and earthquake coverage is a separate decision. Some lenders look at seismic condition on older buildings, and the city's mandatory soft-story program applies to many larger wood-frame buildings.
Utilities matter too. Many older flats share a single water meter or a common boiler, so the owner pays costs that a suburban landlord might pass to tenants. Those costs are not part of the DSCR formula, but they affect your real cash flow and should be in your own budget.
Buyers are long-term holders who value the land and the building more than today's cash flow, investors adding legal units, and owners trading up from condos into whole buildings held in an LLC. Our loans are for investors only; we do not finance a building where the borrower lives in one of the units.
Buildings with five to eight units are still residential for our programs, though maximum LTV can be lower, varies by program. See our San Francisco 5-8 unit page. Buildings of nine or more units belong on our multifamily page.
Send the address, rent roll, leases, the legal unit count and any rent board records you have. If a unit is vacant, include a rent estimate for it and the date it became vacant. We can show you the loan size that clears 1.0x and whether a sub-1.0 program makes sense. Call (877) 298-1001 or use the form below.
Yes. DSCR loans use the combined rent of both units, with no W-2s or tax returns. The challenge is leverage, not documentation.
At the rent in their lease. A tenant paying a controlled rent counts at that amount, which often lowers the loan size.
A permitted accessory unit can count. An unpermitted unit is usually excluded from the rent and the unit count.
Programs allow up to 80% LTV on purchases, but many city buildings only reach 1.0x DSCR somewhere around 45% to 55% LTV. Sub-1.0 DSCR programs are another option.
Yes. LLC borrowers are standard. You sign for the loan personally.
No. Our investor loans are business-purpose loans on non-owner-occupied property.
It is a closing cost, not part of the DSCR. Budget for it in your cash to close if your contract makes you responsible.
Yes. A rate-and-term or cash-out refinance can be sized on new leases once units turn over.
2-3 competing quotes from 30+ capital sources. No credit pull. No commitment.
By clicking, you provide express written consent to be contacted by LendingStreet (NMLS #1734316) via SMS, phone, or email, possibly using automated technology, regarding your loan inquiry. Reply STOP to opt out. Consent is not required to obtain services. See our Privacy Policy and Terms.