Houston has no zoning code, which is one reason small apartment buildings show up in so many neighborhoods. It also has some of the highest property tax and flood insurance costs of any big metro, and both go straight into the ratio.
In short: LendingStreet finances 5 to 8 unit rental buildings across Houston, Harris County and the surrounding suburbs with DSCR loans that qualify on rent, with no W-2s or tax returns. Loans start at $150,000 with no stated maximum and a 1.0x standard minimum DSCR. In Houston, budget property taxes at the full combined rate with no homestead exemption, check the floodplain map and get flood and windstorm quotes before you size the loan.
Older five to eight unit buildings are common in Montrose, Midtown, the Heights and the Near Northside, often two-story brick or frame buildings from the 1950s and 1960s. Spring Branch, Gulfton and Sharpstown have more small garden-style buildings with lower rents and more workforce tenants.
Third Ward and the East End have newer infill, while suburbs such as Pasadena, Pearland and parts of Katy and Spring offer occasional small buildings near job centers like the Texas Medical Center, the Energy Corridor and the Port of Houston.
| Area | Typical stock | Key check |
|---|---|---|
| Montrose, Midtown, Heights | 1950s-1960s two-story buildings | Deed restrictions, parking |
| Spring Branch, Gulfton, Sharpstown | Small garden buildings | Condition, flood history |
| Third Ward, East End | Newer infill | Floodplain elevation rules |
| Pasadena, Pearland | Mixed older stock | MUD taxes, windstorm coverage |
Houston has no traditional zoning, but deed restrictions in many subdivisions limit land use, and the city enforces setback, parking and building rules. Some older neighborhoods have restrictions that bar multifamily use on certain lots, and buildings that predate them may be grandfathered.
Ask a title company to pull the deed restrictions, and confirm the building's unit count with Harris County records.
This example is illustrative and not a quote. An investor buys an eight-unit 1960s building in Montrose for $1,350,000. Taxes are budgeted at the full combined rate on the price, and insurance includes flood and wind coverage. The 8 units rent for an average of $1,250 each, or $10,000 a month in total. Taxes are budgeted at $2,500 a month and insurance at $900.
At 75% LTV the loan is $1,012,500, estimated principal and interest on a 30-year term is about $7,080, and the full payment is about $10,480, for a DSCR of about 0.95x. At 65% LTV the loan drops to $877,500, the payment to about $9,536 and the DSCR rises to about 1.05x, with $135,000 more brought to closing.
At 75% LTV the building barely covers its payment, which is common in Houston because the tax and insurance lines are so large. Lower leverage, higher rents after renovation or a sub-1.0 program are the usual paths.
| Item | 75% LTV | 65% LTV |
|---|---|---|
| Purchase price | $1,350,000 | $1,350,000 |
| Loan amount | $1,012,500 | $877,500 |
| Down payment | $337,500 | $472,500 |
| Estimated principal and interest | $7,080 | $6,136 |
| Property taxes (monthly) | $2,500 | $2,500 |
| Insurance (monthly) | $900 | $900 |
| Total monthly payment | $10,480 | $9,536 |
| Gross monthly rent | $10,000 | $10,000 |
| DSCR | About 0.95x | About 1.05x |
Texas has no state income tax, and local governments rely heavily on property taxes. A Houston property can be taxed by the county, the city, a school district, a community college district, a hospital district, a flood control district and, in many suburbs, a municipal utility district. The combined rate is high.
The Harris Central Appraisal District values property every year, and rental buildings do not get homestead exemptions or the homestead cap. Budget taxes on your purchase price at the full combined rate. Texas has no state transfer tax, which helps closing costs.
Hurricane Harvey in 2017 flooded large parts of the metro, including areas outside the mapped 100-year floodplain. The city and Harris County later tightened floodplain building rules, including higher elevation requirements for new construction and major renovations in mapped areas.
Flood insurance is generally required on a financed building in a mapped flood zone, and many investors buy it elsewhere too. Hurricanes such as Beryl in 2024 also keep wind premiums high. Get both quotes and the flood history before you commit.
Houston is a renter-heavy metro with a large supply of newer apartments, which means older small buildings compete on price and location. Buildings near the Medical Center, downtown and the Galleria tend to hold occupancy better than those far from job centers.
Underwriters use the appraiser's market rent; concessions offered by nearby new buildings can limit how much rent an older building supports.
A building with five to eight units is still residential financing, so it qualifies on rent the way a single-family rental does. In Houston, the appraiser's rent schedule and any signed leases set the income, and the ratio compares that income with principal, interest, taxes, insurance and any association dues. No W-2s or tax returns are needed.
Loans start at $150,000 with no stated maximum. Purchases can reach 80% LTV and cash-out refinances 75% LTV, but on 5-8 units the top leverage is often lower and varies by program. The standard minimum DSCR is 1.0x, the minimum credit score is 620, LLC borrowers are standard and 30-year terms are available. If the ratio lands just under 1.0x, a sub-1.0 DSCR program may fit.
Get a quote with the form below or by calling (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property, and every 5-8 unit file is reviewed on the building's own cash flow. Compare with our Texas 5-8 unit DSCR page for state-level rules, and note that nine units and up is a commercial loan.
Because property taxes and insurance are both high. Taxes are often 2% or more of value with no homestead exemption, and flood and wind coverage add more.
No. Deed restrictions, city building codes, parking rules and floodplain regulations still apply.
If the building is in a mapped flood zone and financed, generally yes. Many investors carry it even outside mapped zones because of Harvey.
No. Texas has no state or local real estate transfer tax, though title and recording costs still apply.
Inside the city core, usually not, but many suburban subdivisions around Pearland, Katy, Spring and Cypress carry municipal utility district taxes on top of county, city and school rates. They count in the payment and lower the ratio.
Yes. LLC borrowers are standard on our DSCR loans, and you sign for the loan personally as part of the process.
No. Our investor loans are business-purpose loans on non-owner-occupied property, so every unit must be rented to tenants.
The standard minimum is 1.0x, meaning rent covers the full monthly payment. Sub-1.0 programs exist for some buildings with strong value and reserves.
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