A 30-year loan on an apartment building is not always what it sounds like. The fixed period, the amortization and the prepayment terms can each be different numbers.
In short: A 30-year multifamily loan spreads repayment over 30 years, which lowers the monthly payment and improves cash flow. Some programs fix the rate for the full 30 years. Others fix it for 5, 7 or 10 years on 30-year amortization, then adjust or come due. LendingStreet finances 30-year structures on 5+ unit investment properties, and the right one depends on how long you plan to hold.
Amortization is the schedule used to calculate your payment. Term is when the loan must be paid off. The fixed period is how long the rate stays locked.
A loan can have 30-year amortization with a 10-year term, which means a balloon payment at year 10. Always confirm all three numbers before comparing offers.
| Structure | Rate fixed for | Loan due |
|---|---|---|
| 30-year fixed, fully amortizing | 30 years | Year 30 |
| 10-year fixed, 30-year amortization | 10 years | Year 10 or adjusts |
| 5-year fixed, 30-year amortization | 5 years | Year 5 or adjusts |
Apartment loans are sized on net operating income versus debt service. A lower payment means a higher coverage ratio. That can increase the loan amount you qualify for on the same building.
It also leaves more cash each month for repairs, vacancy and reserves. On older buildings, that cushion is often worth more than paying the loan down faster.
This example uses an illustrative 7.0% rate, not a quote. The loan is $1.5 million on a 14-unit building.
On 30-year amortization, the payment is about $9,980 a month. On 25-year amortization, it is about $10,602. That $622 monthly difference adds up to roughly $7,460 a year in cash flow and coverage.
| Payment type | Monthly | Annual |
|---|---|---|
| 30-year amortization | $9,980 | $119,754 |
| 25-year amortization | $10,602 | $127,220 |
| Interest-only (where offered) | $8,750 | $105,000 |
Most long-term multifamily loans carry a prepayment penalty. A common form is a step-down, where the penalty shrinks each year until it disappears. Other structures use yield maintenance or a fixed percentage.
The length and type vary by program. A shorter penalty often costs a little more in rate. If you might sell or refinance within five years, weigh that trade carefully.
Some programs offer an interest-only period at the start of the loan. That lowers payments while you raise rents or finish light improvements.
The catch is that the payment rises when amortization starts. Underwriters may also size the loan on the amortizing payment, not the interest-only one.
Rates on long-term multifamily loans move with the market. Your rate also depends on loan size, leverage, the coverage ratio, the prepayment structure and the building’s condition.
Do not compare a 30-year fixed quote to a 5-year fixed quote on rate alone. Compare the payment, the prepayment penalty and what happens when the fixed period ends.
If you plan to hold for decades and want certainty, a fully fixed 30-year loan fits. If you expect to sell or refinance within 5–10 years, a shorter fixed period may carry a better rate and a shorter prepayment penalty.
Send us your hold plan and building numbers. Our financing team will lay out 2–3 options side by side, including payment, prepayment terms and the coverage ratio on each.
Yes, some programs offer a fully amortizing 30-year fixed rate on 5+ unit investment properties. Many others use a 5, 7 or 10-year fixed period on 30-year amortization. Availability depends on loan size, property and borrower profile.
A balloon is the remaining balance due when the term ends before the loan is fully paid off. On a 10-year term with 30-year amortization, most of the principal is still owed at year 10. Most investors refinance or sell before that date.
Often, yes. Locking a rate longer usually costs more than a shorter fixed period. Rates also move with the market, so compare current options rather than past quotes.
It varies widely, commonly from about 3 to 10 years on long-term loans. Step-down penalties are common on smaller buildings. Shorter penalties are usually available for a trade-off in rate.
Usually. Longer amortization lowers the annual payment, which raises the coverage ratio. That can support a larger loan on the same NOI, up to the program’s leverage limit.
Yes, but check the prepayment penalty first. On a step-down structure, waiting a year or two can cut the cost significantly. Run the savings against the penalty before you commit.
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Properties with 5+ units are commercial by definition, so they fall outside Fannie/Freddie residential programs. But at 5-20 units the loan is usually too small for institutional multifamily desks, whose minimums and timelines are built for 50+ unit assets. The result is a financing gap: too big for residential, too small for institutional.
Through DSCR-based and bridge capital sources that underwrite to the property's net operating income rather than agency checklists. Typical structures: purchase or refinance at up to 75% LTV, 5-20 units, $200K-$20M, with bridge-to-perm available for value-add and lease-up plays.
Stabilized small multifamily DSCR loans typically close in 14-21 days. Bridge structures for value-add acquisitions can close in 5-10 days, then refinance into permanent DSCR financing after stabilization.
No. These programs underwrite the property's income (NOI / DSCR), not your tax returns. LLC borrowers are standard, and there is no W2 requirement.
Mixed-use with a residential majority (for example, apartments over retail) can be placed through commercial and mixed-use capital sources through the same LendingStreet application, with custom terms up to $5M+.