Open 24/7, 365 Days/Yr | Call Us: (877) 298-1001 NOTE: For a FASTER Response, please Inquire Using Form
DSCR · Delaware 5-8 Units

Delaware 5 to 8 Unit DSCR Loans

Delaware is small, but its 5 to 8 unit market is varied. Wilmington has converted rowhouses and small apartment buildings, Newark has buildings full of University of Delaware students, and the beach towns have seasonal properties. Low property taxes help; the transfer tax does not.

Get a quote →

In short: Yes. LendingStreet finances 5 to 8 unit rental buildings in Delaware with DSCR loans that qualify on the building's rent, starting at $150,000 with no stated maximum and LLC borrowers standard. Purchases can go up to 80% LTV and cash-out up to 75%, though maximum leverage on 5-8 units varies by program. Delaware's low property taxes help the ratio, but its realty transfer tax is one of the highest in the country, and the recent statewide reassessment changed many tax bills.

Delaware's 5 to 8 unit housing stock

Wilmington has older brick and stone buildings converted into five to eight units in neighborhoods such as Trolley Square, the Highlands edges and around downtown, plus small apartment buildings on the east and west sides. Newark has small buildings and converted houses rented to students near the University of Delaware.

Dover has small buildings near Dover Air Force Base and Delaware State University. In Sussex County, Rehoboth Beach, Lewes and nearby towns have some small multi-unit properties, often seasonal and priced well above year-round rents.

Sizing a 5 to 8 unit loan in Delaware

LendingStreet treats 1 to 8 units as residential, so a five-, six-, seven- or eight-unit building in Delaware is underwritten as a rental property rather than a commercial loan. The loan qualifies on the building's rent: total monthly rent divided by the full monthly payment, including principal, interest, taxes, insurance and any association dues.

Standard programs look for 1.0x or better, and sub-1.0 programs exist for buildings that come up a little short. Maximum leverage on 5-8 unit properties is often lower than on a single-family rental and varies by program and loan size.

What the appraiser and underwriter look at

A 5 to 8 unit building is usually appraised with more weight on the income approach than a house would be. The appraiser compares its rents with similar small buildings nearby and reconciles that with sales comparables. Delaware's market is small, so appraisers may draw 5-8 unit comparables from nearby counties or from older sales, and the rent analysis carries weight.

Underwriting works from the rent roll and the leases. Expect to provide a current rent roll showing each unit, its rent and lease dates, plus copies of the leases. Vacant units are usually counted at the appraiser's market rent, and some programs use the lower of actual and market rent.

Transfer tax and the new reassessments

Delaware's realty transfer tax is high compared with most states, combining a state share and a local share, and custom often splits it between buyer and seller. On a 5-8 unit purchase it can be a large closing cost, so negotiate who pays and confirm the figure with your closing attorney.

All three counties completed property reassessments recently after decades without one, and many bills changed. Delaware property taxes remain low overall, but use the new assessed value, not an older bill.

Coastal flood and older buildings

Coastal Sussex County and low-lying areas along the Delaware River and Bay have flood zones and wind exposure. Flood coverage, if required, goes into the DSCR payment.

Older Wilmington buildings may draw questions about wiring, heat and roof condition. A current whole-building quote is the number to use.

Example: running the numbers on a Wilmington five-unit converted building

This example is illustrative and not a quote. An investor buys a Wilmington five-unit converted building for $720,000. Each of the 5 units rents for $1,300 a month, for $6,500 in total. Property taxes are budgeted at $4,600 a year and the whole-building insurance quote is $6,200 a year.

At 75% LTV the loan is $540,000, leaving $180,000 down before closing costs. On 30-year amortization, principal and interest is about $3,776 a month. Adding $900 for taxes and insurance brings the payment to about $4,676, so the DSCR is about 1.39x, above the 1.0x standard minimum. If underwriting counted one unit as vacant with no market rent support, the ratio would drop to about 1.11x, which is why signed leases and the appraiser's rent analysis matter.

ItemAmount
Purchase price$720,000
Units and gross monthly rent5 units, $6,500
Loan at 75% LTV$540,000
Principal and interest (30-year)About $3,776
Taxes and insurance per monthAbout $900
Total monthly paymentAbout $4,676
DSCRAbout 1.39x

Delaware landlord code and Newark permits

Delaware's Residential Landlord-Tenant Code sets rules on deposits, notices and repairs. There is no rent control in Delaware.

Newark requires rental permits and sets occupancy limits for many rental units, which matters for student buildings. Wilmington has its own rental licensing. Check local rules before you underwrite rents.

Documents that keep the file moving

Having these together before you apply keeps the appraisal and underwriting on schedule.

When this loan is the right tool

These loans fit investors in Delaware who want to qualify on the building's income instead of personal tax returns, hold title in an LLC and finance on a 30-year term. Our investor loans are business-purpose loans on non-owner-occupied property, so a building where you plan to live in one of the units is not eligible.

If the building needs heavy renovation or has several vacant units, a short-term bridge loan and a later refinance into a DSCR loan can be the better path. Buildings with nine or more units are commercial; see our multifamily loans page for those. Call (877) 298-1001 or use the form below to get a quote.

Common questions

Do you lend on small apartment buildings in Delaware?

Yes. LendingStreet finances 5 to 8 unit investment buildings in Delaware with DSCR loans from $150,000, qualified on the building's rent with LLC borrowers standard.

Will my six-unit building be treated as commercial?

LendingStreet treats 1 to 8 units as residential, so a 5 to 8 unit building is underwritten as a rental property on its rent. Nine or more units is commercial lending.

Who pays the Delaware transfer tax?

By custom it is often split between buyer and seller, but the contract decides. Because the rate is high, it is worth negotiating, and your closing attorney will show the amounts.

Do you lend on Newark student rentals?

Yes, for 5 to 8 unit investment buildings with leases and the required rental permits. Newark's occupancy rules affect rents, so make sure your rent roll reflects the permitted occupancy.

Can I occupy one unit and rent the rest?

No. Our investor loans are business-purpose loans on non-owner-occupied property, so the building has to be fully used as a rental.

How are vacant units counted?

Vacant units are usually counted at the appraiser's market rent, and some programs use the lower of actual and market rent. Several vacancies can reduce the loan amount, and a bridge loan may be the better first step.

Can I pull cash out of a building I already own?

Yes, up to 75% LTV on standard programs, often lower on 5-8 units. The rent still has to cover the new payment, and seasoning rules vary by program.

DSCR loans in Delaware5 to 8 unit DSCR loansBest DSCR lenders in DelawareDelaware DSCR cash-out refinanceBridge loans in DelawareFourplex investment property loansDSCR calculatorMultifamily loans (9+ units)

Get Your 5-8 Unit DSCR Quote

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.