In New York City, the difference between a five-unit and a six-unit building can be the difference between market rents and rent stabilization. That single fact shapes value, rent and how much you can borrow.
In short: LendingStreet finances 5 to 8 unit rental buildings in Brooklyn, Queens, the Bronx, Upper Manhattan and Staten Island with DSCR loans that qualify on rent, not tax returns. Loans start at $150,000 with no stated maximum and a 1.0x standard minimum DSCR. In NYC, check whether units are rent stabilized, budget for the mortgage recording tax and Class 2 property taxes, and expect lower leverage than in most markets.
Small walk-ups and brownstones converted to apartments are common in Bushwick, Bedford-Stuyvesant, Crown Heights and Sunset Park in Brooklyn; Ridgewood, Astoria and Sunnyside in Queens; Mott Haven and Fordham in the Bronx; and Harlem and Washington Heights in Manhattan.
Many are three- or four-story buildings with a storefront or one apartment per floor. Staten Island has fewer, mostly near the North Shore.
Buildings with a ground-floor store and apartments above are common. If commercial space makes up a large share of the building, it may fall outside residential DSCR guidelines, so tell us the square footage of any commercial unit up front.
| Area | Typical stock | Key issue |
|---|---|---|
| Bushwick and Ridgewood | Walk-ups, some with storefronts | Stabilized units, mixed use |
| Bed-Stuy and Crown Heights | Brownstones, small walk-ups | Unit count, stabilization history |
| Harlem and Washington Heights | Older walk-ups | Stabilized rents, building systems |
| Mott Haven and Fordham | Walk-ups | Rent levels, HPD violations |
Buildings with six or more units built before 1974 are generally subject to rent stabilization under state law. After the 2019 Housing Stability and Tenant Protection Act, units can no longer be deregulated through vacancy or high-rent rules, and rent increases on stabilized units are set by the Rent Guidelines Board.
For underwriting, stabilized rents are the rents. A five-unit building is usually not stabilized and can carry market rents. Ask for the DHCR rent registration history for each unit.
This example is illustrative and not a quote. An investor buys a six-unit walk-up in Ridgewood for $2,400,000. All six units are rent stabilized, so in-place stabilized rents are the income. The 6 units rent for an average of $2,300 each, or $13,800 a month in total. Taxes are budgeted at $2,200 a month and insurance at $900.
At 75% LTV the loan is $1,800,000, estimated principal and interest on a 30-year term is about $12,586, and the full payment is about $15,686, for a DSCR of about 0.88x. At 60% LTV the loan drops to $1,440,000, the payment to about $13,169 and the DSCR rises to about 1.05x, with $360,000 more brought to closing.
At 75% LTV the stabilized rents do not cover the payment. At 60% LTV the ratio clears 1.0x. This is typical for stabilized NYC buildings, which often need lower leverage.
| Item | 75% LTV | 60% LTV |
|---|---|---|
| Purchase price | $2,400,000 | $2,400,000 |
| Loan amount | $1,800,000 | $1,440,000 |
| Down payment | $600,000 | $960,000 |
| Estimated principal and interest | $12,586 | $10,069 |
| Property taxes (monthly) | $2,200 | $2,200 |
| Insurance (monthly) | $900 | $900 |
| Total monthly payment | $15,686 | $13,169 |
| Gross monthly rent | $13,800 | $13,800 |
| DSCR | About 0.88x | About 1.05x |
NYC places buildings with one to three units in Class 1 and buildings with four or more units in Class 2. Small Class 2 buildings, those with four to ten units, have caps on annual assessment increases. Taxes are still a large share of expenses. Pull the Department of Finance notice of property value and budget accordingly.
Assessment increases on small Class 2 buildings are capped annually and over five years, so the tax bill can lag behind market value. A sale does not reset the cap the way it does in some states, but assessments can still rise over time as the city phases in value changes.
Water and sewer charges are billed separately by the Department of Environmental Protection and can be substantial on a building with older fixtures. Ask for a year of water bills.
New York City charges a mortgage recording tax of roughly 2% or more of the loan amount, and the rate on buildings with four or more units is higher than on one- to three-family homes. City and state transfer taxes are customarily paid by the seller.
These costs do not affect DSCR but add significantly to cash needed at closing.
Buildings with three or more units must register annually with the Department of Housing Preservation and Development. Check HPD and DOB records for open violations, and confirm the certificate of occupancy matches the unit count. Lead paint rules under Local Law 1 apply to older buildings with young children in residence.
Open violations do not always stop a loan, but serious ones, such as class C immediately hazardous violations, need to be addressed. A clean violation history also makes insurance easier to place.
Because the New York City building has eight units or fewer, the file is reviewed under residential DSCR guidelines. Income comes from the rent roll and the appraiser's market rent opinion, and the payment side includes principal, interest, taxes and insurance. Personal income documents are not part of the qualification.
Program basics: $150,000 minimum with no stated maximum, up to 80% LTV on purchases, up to 75% LTV on cash-out, a 1.0x standard minimum ratio, a 620 minimum credit score and 30-year terms. On five to eight units, maximum LTV is frequently below the headline numbers and varies by program, so plan your down payment conservatively.
Tell us the address, unit count, rents and what you want the loan to do, using the form below or (877) 298-1001. Our investor loans are business-purpose loans on non-owner-occupied property. The financing team runs the ratio at a few loan amounts so you can see the tradeoff between leverage and DSCR. See also our New York 5-8 unit DSCR page.
Buildings with six or more units built before 1974 are generally stabilized. Check the DHCR registration for each unit.
Not under current law. The 2019 HSTPA ended most deregulation paths.
Roughly 2% or more of the loan amount, higher on buildings with four or more units.
High prices, taxes and stabilized rents mean the ratio often only clears 1.0x at lower LTV.
Yes, for buildings with three or more units.
Yes, up to 75% LTV on a cash-out refinance, often lower on 5-8 units. Seasoning requirements vary by program, and the rent must still cover the new payment.
Not with our DSCR program. Properties with 1 to 8 units are financed as residential investment property, qualified on rent. Nine units and up is commercial.
Yes. LLC borrowers are standard on our DSCR loans, and you sign for the loan personally as part of the process.
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