Small apartment buildings of five to eight units are scattered through older Jackson neighborhoods and along a few suburban corridors. They sit in a useful gap: more income than a fourplex, but still financed as residential property on a DSCR loan.
In short: LendingStreet finances 5-8 unit residential buildings across the Jackson metro with DSCR loans that qualify on the building's combined rent, with no tax returns or W-2s. Loans start at $150,000 with no stated maximum, the standard minimum DSCR is 1.0x and the minimum credit score is 620. Maximum LTV on 5-8 unit properties can be lower than on 1-4 units and varies by program.
Older two-story brick buildings from the 1950s through the 1970s show up in Belhaven, Fondren and the neighborhoods near Millsaps College and UMMC, where tenants include medical residents, nurses and students. North Jackson and parts of Ridgeland have small garden-style buildings, and Clinton has some near Mississippi College.
In Madison and Rankin counties, newer 5-8 unit buildings are less common; most investment property there is single-family or duplexes.
These buildings rarely come to market through the same channels as single-family homes. Many trade between local investors, through estate sales or through commercial agents. Being ready with financing, or a quick bridge loan, can matter when one comes up.
| Area | Typical building | Tenant base |
|---|---|---|
| Belhaven, Fondren | Older brick, 6-8 units | Medical staff, young professionals |
| Near Millsaps and UMMC | Small walk-up buildings | Students, residents, hospital staff |
| North Jackson, Ridgeland | Garden-style, 5-8 units | Working professionals, families |
| Clinton | Small buildings near campus | Students and local workers |
This example is illustrative and not a quote. An investor buys a six-unit building near Fondren for $548,000. Each unit rents for $935, for $5,610 a month. Taxes at the investor class are $610 a month and insurance is $540.
At an illustrative 75% LTV the loan is $411,000 with estimated principal and interest of about $2,874. The total payment is about $4,024 and the DSCR is about 1.39x. If the program caps leverage at 70% for this building, the loan is $383,600, the payment about $3,832 and the DSCR about 1.46x.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Loan | $411,000 | $383,600 |
| Estimated principal and interest | $2,874 | $2,682 |
| Taxes | $610 | $610 |
| Insurance | $540 | $540 |
| Total payment | $4,024 | $3,832 |
| Gross rent | $5,610 | $5,610 |
| DSCR | About 1.39x | About 1.46x |
Many older Jackson buildings have a single water meter, so the owner pays water and sewer for every unit. Given the city system's recent history of outages and billing problems, ask for 12 to 24 months of utility bills and confirm the account balance. Owner-paid utilities do not enter the DSCR calculation, but they come straight out of your cash flow.
Some owners install separate meters or use a ratio billing system to recover water costs from tenants. Check whether that is allowed and practical for the building before you count on it.
Carriers look at roof age, wiring, plumbing and the age of the building. Older buildings with original electrical panels can be harder to insure. Central Mississippi's hail and tornado exposure also shows up in the wind deductible. Get a quote before you are under contract, not after.
Ask the seller for the current policy and any recent claims. A building that has had a recent roof or hail claim may already have a new roof, which helps, or may have deferred repairs that a new carrier will not accept.
Updated wiring, plumbing and a newer roof make a building easier to insure and can lower the premium, which directly improves the ratio.
Maximum LTV on five-to-eight unit buildings is often lower than on 1-4 units, and it varies by program and loan size. Reserves may also be higher. Plan your down payment around a range rather than a single number.
The worked example shows why that matters. Moving from 75% to 70% LTV changes both the down payment and the ratio, and on a building with modest rents that can decide whether the deal works.
Reserves after closing also matter more on a building than on a single house, since one roof or boiler can cost far more.
Mississippi assesses rental property at a 15% assessment ratio. In the city of Jackson, city, county and school millage all apply, and the combined bill on a small building can be a large share of the payment. Use the actual county tax record, not the listing estimate.
If the building was recently sold at a much higher price than its last assessment, ask whether the county is likely to reassess. Budget on the higher figure so the ratio holds up after the first new bill.
Underwriting uses the rent roll and leases. Month-to-month tenants, below-market rents and vacant units all affect the number. If the building has been under-managed, a bridge loan to stabilize it, followed by a DSCR refinance, can be the better path.
Near UMMC and Millsaps, leases often follow residency and academic calendars, with many move-outs in late spring and summer. Look at lease expiration dates and plan for turnover in those months.
Buildings with nine or more units are commercial property. See our multifamily loan page for those.
If you are comparing an eight-unit building with a ten-unit one, the financing paths are different, so ask us about both early.
Send the rent roll, price and address with the form below or call (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. For other Mississippi markets, see our Mississippi 5-8 unit page.
If the building needs work before it can carry a long-term loan, we can also review a bridge loan for the purchase and a DSCR refinance once it is stabilized.
For our programs, 1-8 units is residential and can use a DSCR loan. Nine or more units is commercial. That distinction changes the loan program, documents and underwriting.
It varies by program and is often lower than on 1-4 units. Plan your down payment around a range and ask us early for the program limit on your building.
No, the DSCR uses principal, interest, taxes, insurance and any HOA. Utilities still affect your actual cash flow. Ask for the utility history before you make an offer.
Yes, but vacancies lower the qualifying rent. A bridge loan to stabilize first can help. Month-to-month tenants and below-market leases also affect the qualifying rent.
No. The loan qualifies on the building's rent. LLC borrowers are standard and the minimum credit score is 620.
The standard minimum is 1.0x, with sub-1.0 programs available in some cases. Most small buildings here are underwritten at or above 1.0x.
No. Our investor loans are business-purpose loans on non-owner-occupied property. If you want to live in one unit, this program is not the right fit.
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