Across North Jersey and the older cities to the south, the 5 to 8 unit walk-up is one of the most common rental buildings. They trade often, rents are strong, and local rules can change the numbers as much as the rate does.
In short: LendingStreet makes DSCR loans on 5, 6, 7 and 8 unit residential rentals in New Jersey, sized on the building's rent rather than your income. Expect a 620 minimum credit score, a 1.0x standard minimum ratio and leverage that varies by program, often a little below what a fourplex gets. In New Jersey, high property taxes, municipal rent control and certificate-of-occupancy rules are the items that most often change a deal.
Hudson County has a large supply: Jersey City, Union City, West New York, Bayonne and Hoboken all have brick and frame walk-ups with five to eight units. Newark, Elizabeth, Paterson, Passaic and East Orange have similar buildings at lower prices per unit.
In Central and South Jersey, small buildings appear in New Brunswick near Rutgers, Trenton, Camden, Asbury Park and older shore towns. Prices and rents vary widely from town to town, so comparisons should stay local.
| Area | Typical buildings | What to check |
|---|---|---|
| Jersey City, Hoboken, Union City | Brick walk-ups near transit | High prices; rent control in many towns |
| Newark, Elizabeth, Paterson | Frame and brick multifamily | CO inspections, deferred maintenance |
| Trenton, Camden, shore towns | Older buildings and conversions | Flood zones, building condition |
Underwriting adds up the rent from every unit, using signed leases and the appraiser's market rent opinion, and divides it by the full monthly payment: principal, interest, taxes, insurance and HOA dues if any. Standard programs look for 1.0x or better.
Taxes and insurance carry more weight on a 5 to 8 unit building than on a single-family rental, because the bills are bigger and they sit inside the payment. A tax bill that is $300 a month higher than you planned, or an insurance quote that jumps at renewal, can move the ratio more than a modest change in rate.
Because 5 to 8 units is treated as residential on our programs, you qualify on rent with no W-2s or tax returns. What changes from a fourplex is leverage: purchase loans go up to 80% LTV on some programs, but 5 to 8 unit buildings often get less. Plan your down payment with that in mind.
| Term | What to expect |
|---|---|
| Property type | 5 to 8 unit residential rental |
| Loan amount | From $150,000, no stated maximum |
| Purchase LTV | Up to 80% on some programs; often lower on 5-8 units |
| Cash-out LTV | Up to 75%; varies by program |
| Minimum DSCR | 1.0x standard; sub-1.0 programs exist |
| Credit score | 620 minimum |
| Income documents | None; qualifies on rent |
| Borrower | LLC standard; sign for the loan personally |
New Jersey property taxes are among the highest in the country, and on a small apartment building the tax bill is often the second-largest cost after principal and interest. Rates vary by municipality, so a building in one town can carry very different taxes than a similar building a mile away.
New Jersey charges a realty transfer fee at sale, and higher-priced sales can trigger additional fees. The rules on who pays and how much changed recently, so ask your title company for current figures early.
Coastal and river flooding is a real factor in parts of Hudson, Bergen, Middlesex and Monmouth counties and along the shore. If the building is in a mapped flood zone, flood insurance is generally required and the premium counts in the ratio.
Many walk-ups are over 80 years old. Fire escapes, boilers, electrical service and roof condition all affect insurance and the appraisal.
This example is illustrative and not a quote. An investor buys a Union City six-unit walk-up for $1,650,000. Each unit rents for about $2,000 a month, so gross rent is $12,000. Property taxes are budgeted at $2,400 a month and insurance at $550. The owner also pays about $350 a month in utilities and common-area costs, which affect cash flow but are not part of the DSCR payment.
At 75% LTV the loan is $1,237,500. On 30-year amortization, principal and interest is about $8,653, so the payment with taxes and insurance is about $11,603 and the DSCR is about 1.03x.
That clears the 1.0x standard minimum, but with very little cushion if taxes or insurance rise. At 70% LTV the loan drops to $1,155,000, principal and interest is about $8,076, the payment is about $11,026 and the DSCR rises to about 1.09x. The investor brings $82,500 more to closing.
| Item | 75% LTV | 70% LTV |
|---|---|---|
| Purchase price | $1,650,000 | $1,650,000 |
| Gross monthly rent | $12,000 | $12,000 |
| Loan amount | $1,237,500 | $1,155,000 |
| Principal and interest | $8,653 | $8,076 |
| Property taxes | $2,400 | $2,400 |
| Insurance | $550 | $550 |
| Monthly payment (PITI) | $11,603 | $11,026 |
| DSCR | About 1.03x | About 1.09x |
Many New Jersey municipalities, including Jersey City, Newark and Hoboken, have local rent control ordinances that limit increases on covered buildings. Exemptions and rules differ by town, so check before you underwrite rent growth. The state Anti-Eviction Act also requires good cause for most evictions.
Many towns require a certificate of occupancy or continued-occupancy inspection when a unit changes hands or tenants. New Jersey also requires lead-based paint inspections in many pre-1978 rentals at tenant turnover. Plan for the time and cost.
Because prices are high near transit, the rent on a Hudson County building may not support full leverage once taxes are added. Buildings in Newark, Paterson and Trenton often show stronger rent relative to price but need more work. Either way, run the ratio at a few loan amounts before you set your offer.
Gather these before you reach out and the appraisal and underwriting move faster.
Our investor loans are business-purpose loans on non-owner-occupied property. Share the property address, rent roll, purchase price or current loan, and your target loan amount. We will size the ratio with real tax and insurance figures and show you what each loan amount does to it. Get a quote with the form below or call (877) 298-1001.
If the building has nine or more units, it falls under commercial financing instead; see our multifamily loans page.
It depends on the town and the building. Many municipalities have rent control ordinances with their own exemptions. Ask the town's rent board and review the ordinance before you buy.
Many towns require a certificate of occupancy or similar inspection at sale or tenant turnover. Requirements differ, so check with the municipality early.
Many pre-1978 rentals need a lead-based paint inspection at tenant turnover. Budget for the inspection and any work it finds.
No. The loan qualifies on the building's rent. You need a 620 or higher credit score, reserves and entity documents if you buy in an LLC.
Vacant units can often be counted at a market rent the appraiser supports, but some programs want a minimum number of units leased. It varies by program, so tell us about vacancies up front.
On our programs, 1 to 8 units is residential, so 5, 6, 7 and 8 unit buildings qualify for a DSCR loan on rent. Nine or more units moves to commercial financing.
Purchase loans go up to 80% LTV on some programs, but 5 to 8 unit buildings and larger balances often get less. Plan for 20% to 30% down plus reserves, depending on the program and the ratio.
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